Policy Experts Discuss Difference Between Student Loans, Other Debt

By Brittany Hackett, Communications Staff 

Student loans are unlike any other form of debt and the impact on current borrowers can be significant, panelists said at a discussion hosted by New America on Thursday.

The discussion centered on a recent New America report that explored the differences between student loans and other forms of credit, as well as how borrowers view their student loan debt and repayment.

The paper is based on the findings from a series of six focus groups commissioned by New America’s Education Policy Team in an effort to better understand why some students struggle with student loan repayment, an area in which we have “remarkably little information,” the authors state.

Key takeaways of the report include: 

  • Student loans are unlike any other form of credit – and borrowers view taking them out and repaying them differently, as well.
  • Student loan forbearance, delinquency, and default are not viewed as negatively by students as some might think – and therefore student loan repayment may be seen as the lowest priority when students have other types of debt to manage.
  • The ease of the federal student loan system is important, but some students report it contributes to overborrowing and taking on greater debt. 

While discussing the report on Thursday, co-author and Director of the Federal Education Budget Project at New America Jason Delisle said that several findings from the focus groups stuck out to him including that borrowers were surprised by what their monthly payments amounted to, with many saying they were higher than expected. He also discussed the finding that borrowers had resentment toward their student loans and in some cases a feeling of hopelessness about ever being able to pay down the debt.

For the most part, Delisle said, focus group members didn’t point to a lack of counseling or otherwise lack of information about borrowing as being the reason they felt discontented about their current situation regarding student debt. Instead it was more of an issue of borrowers wishing they had known how the future would turn out relative to the risk they took, which he admitted was an impossible thing to achieve. 

Panelist Beth Akers, a fellow with the Brookings Institution’s Brown Center on Education Policy, said the findings of the report and the conversations within the focus groups “present a more subtle or nuanced story than the data can tell.” And while there are limitations to what can be taken away from the report, there are “some extremely valuable conversations” about how future policy should be shaped regarding repayment programs, such as a more simple, robust income-based repayment program. 

Kevin Fudge, manager of government relations and community affairs at American Student Assistance, said the report highlights the difference between loan servicing and loan counseling, and advocated for more robust loan counseling efforts for students on the front end of borrowing, as well as borrowers facing difficulties repaying their loans. NASFAA’s Student Loan Servicing Task Force recently released a report that included six recommendations to improve the experience for borrowers.


Publication Date: 4/3/2015

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