Will Students Be Able To Repay Those Loans?
"Many people who work in financial aid are frustrated by media coverage that suggests lots of students are taking on six-figure debt for a bachelor’s degree. (They’re not.) But even if they think the student-loan crisis talk is overblown, aid administrators do worry about whether students will be able to repay their loans," The Chronicle of Higher Education reports. "That worry is part of their job: If too many of a college’s borrowers default, the college can lose its aid eligibility. Besides, aid administrators tend to care about access and affordability, and if lots of borrowers are struggling, those values are undermined. Whether or not students can manage repayment mainly depends on two things: what they owe, and what they’re making. There is pressure on both sides of that equation right now–greater shares of students have been borrowing for college each year, and in larger average amounts, and the job market for new graduates has been better. The government’s income-based repayment options for federal student loans are supposed to help, but relatively few borrowers have opted into those programs. With that in mind, a good portion of the grantees in the Bill & Melinda Gates Foundation’s Reimagining Aid Design and Delivery project proposed making income-based repayment universal. (The National Association of Student Financial Aid Administrators included the idea in its paper but said it was offering 'policy considerations,' not recommendations.) In this environment, it’s no surprise conversations on student debt were happening all across the association’s conference here this week. Purdue University doesn’t have the money to support all of its needy out-of-state students, said Ted Malone, executive director of financial aid, during one session on Tuesday. That means some of those students end up borrowing quite a bit. Mr. Malone’s office has started including a special note in its communication with nonresidents asking them to consider whether the university is truly a good financial fit. The federal 'shopping sheet' meant to help students compare aid offers from different colleges has proven unpopular with aid administrators, who are well versed in its shortcomings and whose association has not been the biggest fan of a standard award letter format. Still, Mr. Malone tried to capture what he liked best about the shopping sheet in a revamped financial-aid award letter that, among other things, separates grants from loans. 'We really have taken a strong approach,' he said, 'to being really clear about how much this might cost you.'”
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