Experts Talk History, Future of Student Loans
By Emily Isaacman, NASFAA Communications Intern
There's not necessarily a student loan crisis, but there may be a repayment crisis, said Sarah Sattelmeyer, manager of the Pew Charitable Trust's Project on Student Borrower Success.
This observation, as well as the complexity of the student loan system and the need for additional data, was a recurrent theme at a discussion Tuesday morning launching Pew's four-year project on student borrowers and repayment.
"There's still a lot of questions about why this is happening," said Travis Plunkett, senior director of family and economic statements for Pew, in opening statements.
The forthcoming research will add new insight to existing data, Plunkett said, by identifying in-depth patterns about borrower behavior.
Tuesday's event brought together higher education professionals from a variety of backgrounds to shed light on the reality of the issues at hand, and identify the type of research needed to drive the policymaking process forward.
In the first panel, Adam Looney, a senior fellow in economic studies at the Brookings Institution, pointed out that not everyone struggles with student debt. His research has shown that borrowers who have attended four-year public and non-profit private institutions have maintained low default rates.
The panelists said that at-risk borrowers tend to be non-traditional and first-generation students, attend for-profit institutions, and come from minority groups and low-income backgrounds.
Joanna Darcus of the National Consumer Law Center said many of the borrowers she works with are older, having been stuck in perpetual default due to the lack of more generous repayment plans that have only recently become available.
While the current abundance of repayment options is often criticized for overwhelming borrowers, Darcus cautioned against streamlining the system to a point where not all borrowers have a plan suitable to their circumstances.
"We shouldn't just simplify to make it easier for ourselves," Darcus said. "It can be as complex on the back end as it needs to be."
To help borrowers make sense of their choices, the panelists spoke to the importance of fostering strong relationships between loan servicers and borrowers.
"That relationship, if it's solid, can help someone succeed through repayment," Darcus said.
Debra Chromy of the Education Finance Council, speaking on behalf of loan servicers, said many borrowers who default have not spoken to their servicers about their options.
In a later panel during the event focused on how to move forward, Scott Miller, senior vice president and director of federal relations, said servicers view this conundrum as an area "in dire need" of research.
Consistent communication can help alert borrowers to the repayment plan most appropriate for their current situation, Miller said, which is likely to fluctuate as they move through repayment.
For instance, students might not enter jobs eligible for Public Service Loan Forgiveness (PSLF) immediately after graduation, but being aware of the program would be of great help should they change profession later.
"There has to be a better way to get students more engaged," Miller said.
Among other ideas, the panelists said they hoped future policies will include more transparent statistics from the Department of Education (ED), accountability for all parties involved, and more information on the role servicers play in the repayment process.
Josh Mitchell, a reporter from The Wall Street Journal, commented on policymaking trends he's witnessed through covering higher education policy for both the George W. Bush and Obama administrations.
Mitchell acknowledged that both administrations had good intentions, but criticized what he called their "piecemeal" solutions.
"I think a lot of times it's just a band-aid on a broader problem," Mitchell said. "Each administration, and Congress, avoids dealing with the harder issues."
In the same panel, officials from the Bush and Obama administrations shared the strategies behind their policy decisions regarding student aid.
Cheryl Oldham said she spent a year crafting a report on the state of higher education, with a sub-focus on affordability, during her time as chief of staff to the under secretary of education in the Bush administration.
"It's been 12 years since we released this report," Oldham said, "and it feels like we're having the same conversations."
The harsh reality of her comment was met with somber laughter from the crowd of more than 70 higher education and loan professionals.
However, the clear need for deeper information created a spirit of optimism as Pew embarks on its research initiative, which will engage directly with borrowers to draft a comprehensive analysis of their experiences.
"This builds on great work," said Phillip Oliff, one of the project managers. "It's a deeper dive into why we see the borrowing repayment patterns that we do."
Publication Date: 6/20/2018
James H | 6/20/2018 10:29:40 AM
One of the greatest problems in the upcoming student loan crisis is students and parents over borrowing student loans for the cost and benefit of the degree they are seeking. Many parents and students overestimate the return on income versus the level of student loan debt they take on.
As a dad of an 11th grader looking at colleges I have steered the choices away from schools where I see borrowing would become a negative factor compared to the benefit of the college/degree.
I think the question we face in the future is when is a degree from college X too expensive as to be positive when we borrow more then Z. Then college X is not a good choice. We need to get beyond the marketing and hype of admissions and look at the dollars and cents.
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