How Congress Can Fix Student Loan Repayment

Introduction and summary

Students borrowed approximately $91 billion in federal loans in 2018, bringing the total outstanding loan balance to nearly $1.5 trillion.1 For many, college would not have been possible without such readily available financing, but the burden of debt has become too much. More than 1 million borrowers default every year,2 and millions more are stuck in what feels like an endless cycle of interest payments3 and benefits applications.4 Borrowers of color, in particular, are struggling to repay their debt, exacerbating long-term inequities and causing higher education to be more of a gamble than was promised.5

All of these woes are part of the college affordability crisis, but they are also part of a more arcane problem: The United States’ federal student loan repayment system is broken. This year, however, Congress has a chance to fix it. Continue reading “How Congress Can Fix Student Loan Repayment”

Who Are Student Loan Defaulters?

The following article by Ben Miller was posed on the Center for American Progress website December 14, 2017:

College students walk between classes on their campus in New York, February 2017. Credit: AP/Bebeto Matthews

Every year, 1 million student borrowers default on nearly $20 billion in federal loans.1 New data present the best picture ever accessible of who these borrowers are, the path they took into default, and whether or not they were able to return their accounts to good standing.2

The data show that the average defaulter looks very different from stereotypical portrait of a college student as someone who comes straight to college out of high school and lives in a dormitory on campus while pursuing a bachelor’s degree. Defaulters are more likely to be older, be Pell Grant recipients, and come from underrepresented backgrounds than those who never default. The median defaulter takes out slightly over $9,600—just more than one-half of what the median nondefaulter borrows.3 Three out of every 10 defaulters are African American and nearly one-half of all defaulters never finish college.

Continue reading “Who Are Student Loan Defaulters?”

Changes in Service Contracts Leave Students Behind

The following article by Colleen Campbell and Sara Garcia was posted on the Center for American Progress website June 1, 2017:

AP/Carolyn Kaster
Education Secretary Betsy DeVos testifies on Capitol Hill in Washington, Wednesday, May 24, 2017.

Education Secretary Betsy DeVos claims that the recent shake-up in the student loan servicing model is aimed at “treating students as customers,” but her actions say otherwise. Instead, DeVos and the Trump administration have taken steps to pad the pockets of some of the biggest companies responsible for guiding more than 32 million borrowers through the process of repaying their federal student loans.

In a move that will put borrowers’ interests on the back-burner, the U.S. Department of Education recently amended a request for bids on a new federal student loan servicing contract. The changes strip multiple requirements that would ensure that borrowers—especially those with a high risk of default—receive the best servicing when it comes to their loans. Secretary DeVos framed the move as a cost-saving measure, but the contract still leaves in place many high-cost features, suggesting the motivation may be more political than practical. The result: One company will be allowed to call the shots on more than $1 billion in servicing activities with reduced oversight from the Department of Education. Continue reading “Changes in Service Contracts Leave Students Behind”

The Relationship Between Student Debt and College Completion

Center for American Progress logo

On June 29, 2015, Ben Miller with the Center for American Progress wrote the following:


While it is easy to bemoan high levels of student debt and big numbers—such as the more than $1 trillion that Americans currently owe—debt itself is not inherently bad if it allows students to earn high-quality degrees and credentials that they could not otherwise afford. The major issue is whether students who borrowed completed their education. In other words, it is far better to be a bachelor’s degree graduate with $28,400 in loans—the national average in 2013—than a dropout who owes $10,000.

To measure the relationship between debt and college completion, the Center for American Progress conducted an analysis that compared the total amount of student loan debt owed in each state with the number of adults ages 18 or older who earned at least an associate’s degree. The analysis indicates that the average debt of student borrowers can often be misleading. In some states, small debt burdens for borrowers look much worse given low levels of postsecondary attainment. In other states, a high average debt for borrowers may not be as concerning because so many residents are earning postsecondary degrees.

See data on student loan debt per borrower and per graduate in all 50 states and the District of Columbia.

You can read the original post here.