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Cordray Details Higher Ed’s Financing Challenges

By Hugh T. Ferguson, NASFAA Staff Reporter

In the coming months the Department of Education (ED) is slated to confront a number of fiscal challenges pertaining to higher education financing, primarily the federal student loan landscape, and continued efforts to simplify the FAFSA.

Richard Cordray, Federal Student Aid’s (FSA) Chief Operating Officer, recently touted how the agency will tackle these impending challenges during remarks to the Education Finance Council and advocated for policies that would bolster clear communication and a focus on ensuring that future cohorts of students enroll in higher education.

The policy priorities outlined touched on concerns related to continued enrollment declines in the wake of the pandemic, which were of pointed concern to Cordray.

“The early data from this year on FAFSA completion suggests the downward trend may be continuing,” Cordray said. “This is a serious problem for all of us. We cannot afford more cohorts of high school graduates who are somehow failing to move into the next stages of higher education.”

In order to reverse this trend, Cordray committed that FSA would be realigning staffing and resources to ensure that students and families have access to needed financial aid while ED continues to implement federal changes to the program, most notably efforts to simplify the form.

A major fiscal challenge for ED will be reentering federal student loan borrowers back into repayment, an ongoing challenge that has been met with continuous extensions and was only recently given a “final” expiration date.

“​​After January 31 of next year – approximately four months from now – repayment will restart for more than 25 million borrowers,” Cordray said. “This is a defining moment, and it is important that we get it right.”

In reiterating the finality of the extension, Cordray detailed how ED’s continued contingency planning over the benefits past expiration has complicated the messaging behind the eventual resumption of repayment, especially since many borrowers have been hearing a “steady drumbeat” about the possibility of loan forgiveness.

“We can expect that many, many borrowers will not be eager to return to repayment when they have been led to believe, or even to hope, that was never going to happen,” Cordray said. “Getting over that psychological hurdle with millions of Americans may be a much harder job than we know.”

In terms of the student loan repayment system, FSA has also been engaged in negotiations into their servicing contracts where Cordray said achieving new performance and accountability metrics would be among the agency's objectives.

“Some servicers have decided to exit the program rather than contend with these new realities,” Cordray said in regards to a pair of recent servicer exits. “Others have caught the spirit of what we are intending and have embraced a new normal of ‘putting borrowers first.’ We will work closely in partnership with our servicers to make sure we deliver quality service to everyone who faces the prospect of repaying their student loans.”

In order to contest with this shifting landscape Cordray said that in the months ahead FSA will launch a communications campaign that will include: a series of email communications direct to borrowers; general awareness messaging on various forms of social media; paid search, which will advertise federal student loan resources and information within the results of internet search engines; and updated sections of the StudentAid.gov/coronavirus page.

However many borrowers have likely grown accustomed to the current status of the payment pause, and millions of recent borrowers have now gone some time without yet making a single payment on their loans, making the prospect of transitioning borrowers into repayment all the more daunting.

“The stakes are extremely high as we now proceed to change everything once again – for borrowers who may not like what they are hearing from us, may not believe what they are hearing from us, and may not be prepared to cope with what they are hearing from us.”

 

Publication Date: 9/21/2021


Patricia W | 9/21/2021 5:21:33 PM

We also need to tackle the needs analysis method. The current formula is antiquated and does not truly reflect what a family can contribute to educational costs. The living allowances are monastic- like living in a monastery. I am glad that we have resurrected the SAI term - for Student Aid Index. We are very good about recycling terms we have used. Dr. Pat W

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