Equal access to quality education is fundamental to American society. This general principle has very practical implications. Studies consistently show that education is one of the most important indicators of economic status in our society. Education after high school is more than just a fulfilling experience; it is often the difference between basic financial independence…
As the cost of financing our nation’s higher education system falls increasingly on students and families, student loan debt is rising at alarming rates. Most borrowers have to make some sacrifices to repay student loans. The problem, as discussed and documented in this paper, is the extent of these sacrifices. Many student loan borrowers face…
Read More about No Way Out: Student Loans, Financial Distress, and the Need for Policy Reform
There is a severe shortage of assistance resources for the growing population of financially distressed student loan borrowers. This report investigates the student loan borrower assistance network. We review the following critical categories of relief: information and outreach, counseling, and direct assistance and legal representation. We discuss the strengths and weaknesses of existing resource providers…
Private student loans are made by lenders to students and families outside of the federal student loan program. They are not subsidized or insured by the federal government and may be provided by banks, non-profits, or other financial institutions. The borrowing limits in the federal loan programs, the skyrocketing cost of higher education and aggressive…
As of July 1, 2009, a new income-based student loan repayment program (IBR) will allow most federal student loan borrowers with economic hardships to repay their loans based on a formula that takes income and total indebtedness into account. The government will cancel any remaining balances after twenty-five years of repayment. The program should bring…
Read More about Income-Based Repayment: Making it Work for Student Loan Borrowers
The private student loan industry generated huge profits for lenders and investors for many years. Over time, however, the defects in these expensive, unsustainable products became clear and the loans began to fail. The industry hit a wall, exposing the risks of making unsecured, expensive loans to borrowers with little or no ability to repay.…
Before the credit crash in 2008, many proprietary schools partnered with third party lenders to provide private student loans to their students. Private student loans are made by lenders to students and families outside of the federal student loan program. They are almost always more expensive than federal student loans. High rate private student loans…
The astronomical growth in for-profit higher education has exposed increasing numbers of students to the rampant fraud in the sector. Federal and state oversight has generally been lax. In a positive sign for students, the federal government has begun to act more aggressively, expanding disclosures for students, strengthening rules on incentive compensation and misrepresentations, and…
Read More about State Inaction: Gaps in State Oversight of For-Profit Higher Education
Despite the amount of attention garnered by student loan defaults since the 1990s, few studies provide answers about why borrowers default and how best to help them. The lack of research helps perpetuate unproven theories about default, including the idea that the recession is solely to blame for increased default rates. The stakes are high…
Read More about The Student Loan Default Trap: Why Borrowers Default and What Can Be Done
The U.S. Department of Education (the Department) relies on an increasing number of private collection agency contractors to recover defaulted student loans. Although the use of student loan collection agencies is not new, the impact of this policy on borrowers is greater than ever. By contracting out its defaulted loan portfolio and failing to provide…
Student loan debt levels keep growing. There are nearly 39 million borrowers carrying over $1 trillion in federal student loan debt. About $120 billion of federal student loan debt was delinquent in 2012 — a 30.5% increase from fiscal year 2011. Most borrowers fall behind on student loan payments because they are unable to complete…
Read More about The Sallie Mae Saga: A Government-Created, Student Debt Fueled Profit Machine
A college education usually pays off. According to College Board statistics, individuals with higher levels of education earn more money and are more likely to be employed. College is a key ticket to social mobility in this country, but punching this ticket is rarely straightforward. On one hand, the earnings advantage is due more to…
Read More about No Lost Causes: Practical Ideas to Help Low-Income Students Succeed in College