November 27, 2018 — Department of Education Secretary Betsy DeVos Tuesday in her opening remarks at the Federal Student Aid (FSA) Training Conference spoke of a “crisis in higher education” and needed “policy changes in the way we distribute, administer, and manage federal student loans.”
NASFAA President Justin Draeger issued the following statement in response to DeVos’s remarks:
“We applaud the Secretary for highlighting a national issue that is affecting millions of students and families across the country. We agree with her assessment that it will take a joint effort between schools, students, lawmakers, researchers, federal agencies and others to reduce the negative impacts of over-borrowing. The financial aid community stands ready to work with policymakers to find and implement solutions that will help keep college affordable without burying families in levels of debt that cannot be repaid.”
The National Association of Student Financial Aid Administrators (NASFAA) has issued the following recommendations to help curb overborrowing:
Give schools authority to limit loans and ability to require additional loan counseling. Grant financial aid administrators the authority to limit loans for specific populations, academic programs, credential levels, or other categories established by the school and mandate forms of additional counseling, such as financial literacy workshops, on top of required one-time entrance and exit counseling.
Eliminate origination fees. Origination fees act as a tax on student loan borrowers and stand in clear opposition to the overwhelming congressional support for simplification, transparency, and affordability in the federal student aid system.
Simplify annual loan limits. Eliminate annual loan limit differences by establishing a single undergraduate subsidized and unsubsidized loan limit.
Link aggregate borrowing to year in school. Lower limits would apply to undergraduate students who have not yet successfully completed the second year of an undergraduate program. This would prevent students who are not progressing toward degree completion from continuing to borrow.
Preserve and solidify the Public Service Loan Forgiveness program. PSLF encourages students to pursue and commit to careers in public service like social work, teaching, and law enforcement without fear that their student loan payments will follow them for decades. There have been several proposals to eliminate PSLF entirely, but NASFAA urges Congress to remember that there are thoughtful alternatives to ending the program. A cap on the maximum amount of forgiveness combined with proportional forgiveness may ensure that students are discouraged from over-borrowing.
Several other points of welcome news were also announced during the secretary’s remarks including:
To request an interview with a NASFAA spokesperson on the secretary’s remarks, or NASFAA’s recommendations to reduce student loan indebtedness, please email [email protected] or call (202) 785-6959.
The National Association of Student Financial Aid Administrators (NASFAA) is a nonprofit membership organization that represents more than 20,000 financial aid professionals at nearly 3,000 colleges, universities, and career schools across the country. NASFAA member institutions serve nine out of every ten undergraduates in the United States. Based in Washington, D.C., NASFAA is the only national association with a primary focus on student aid legislation, regulatory analysis, and training for financial aid administrators. For more information, visit www.nasfaa.org.
Publication Date: 11/27/2018