White House Report Outlines Efforts To Address Student Debt, College Affordability

By Brittany Hackett, Communications Staff

The Obama Administration continues to make college affordability a top priority, according to a recent report outlining the administration’s past efforts to address the issue and upcoming executive actions to support federal student loan borrowers.

The report, released June 10 by the White House Domestic Policy Council and the Council of Economic Advisers, offers a brief overview of the state of higher education and student loan debt. Currently 71 percent of those who graduate with a bachelor’s degree have loan debt, with an average debt amount of $29, 400, the report says. In early 2014, the student loan debt balance stood at $1 trillion, compared to $250 billion in 2003, making it the second largest debt category for household debt after mortgages. 

Still, higher education “continues to be an excellent investment for most students,” according to the report. In 2013, the median annual, full-time earning for bachelor’s degree, or higher, recipients was $62,300, about $28,300 more than their peers with only a high school diploma.

“The high returns to a college education make student loan payments affordable for most borrowers,” the report states. “Some borrowers, however, clearly struggle to make payments and this may be particularly concerning for students just starting their careers when earnings may be relatively low or when they are still looking for work.”

The report summarizes Administration efforts to-date, including:

  • Increasing the maximum Pell Grant award by more than $1,000 for an estimated 8.9 million students in 2013;
  • Creating the $2,500 American Opportunity Tax Credit, which is expected to benefit 11.5 million families;
  • Using tools like the College Scorecard and the Financial Aid Shopping Sheet to increase transparency in college costs; and
  • Promoting awareness of repayment options for borrowers, such as the Pay As You Earn plan.

According to the report, the president has “announced additional executive actions to help support federal student loan borrowers, especially vulnerable borrowers and those that may be at risk of future default on their loan obligations.”

Among those actions is the proposed college ratings system, which is expected to be put into place for the 2015-16 academic year, as well as a directive to the Secretary of Education to allow federal student loan borrowers to cap their payments at 10 percent of their monthly income. 

The Secretaries of Education and the Treasury will also be directed by Obama to work together on several initiatives, including:

  • Renegotiating contracts with federal loan servicers to ensure better servicing for borrowers;
  • Automatically reducing interest rates for eligible servicemembers to match the Servicemember Civil Relief Act;
  • Working with private companies to communicate information about repayment options during the tax filing process;
  • Redoubling efforts to identify borrowers who may benefit from income-based repayment options; and
  • Developing a pilot project to test the effectiveness of loan counseling resources, including the Department of Education’s Financial Awareness Counseling Tool. A Presidential Memorandum on that initiative mentions NASFAA by name as a partner in that effort.

 

Publication Date: 6/17/2014


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