It’s been a very busy year in the student loan world. The media, policymakers and regulators have started to wake up to the scope of student loan debt and the consequences for borrowers, their families and the economy.
We will be taking a short break at Student Loan Borrower Assistance Project. Before we go, here are a few highlights from 2013:
The Institute for College Access and Success (TICAS) recently issued a report on student debt and the class of 2012. Other important data collections and summaries include information from the College Board Trends reports and a number of reports released by the Consumer Financial Protection Bureau (CFPB). CFPB Assistant Director and Student Loan Ombudsman Rohit Chopra analyzed the impact of growing student loan debt on the American economy in this presentation to the Federal Reserve Bank of St. Louis in November.
We continued to focus on problems with student loan debt collection and servicing. Our March 2013 report highlighted ongoing problems with the Department of Education’s private collection agency complaint system. We also noted some areas of improvement. In addition, we issued a report in June about the growing student loan “debt relief” industry. The industry is often deceptive, claiming to offer services that federal student loan borrowers can get for free. Unfortunately, many borrowers turn to these services because of problems navigating the Department of Education bureaucracy. These hurdles were the subject of many of the reports issued through the Gates Foundation’s Reimagining Aid Design and Delivery (RADD) project. Inside Higher Ed summarized the various RADD reports while the Chronicle of Higher Education highlighted the growing influence of the Gates Foundation in student aid work and higher education policy (“The Gates Effect.”).
New America’s analysis of problems with merit aid focused on the ways in which colleges compete for higher income students and leave lower income students behind. Media reports, including this article in the Atlantic picked up on this trend, asking if colleges are becoming a force for inequality. Persistent gaps remain in college access and success based on class status and race. There have, however, been some improvements in college graduation rates for some minority groups, as the Education Trust wrote about in July.
Unfortunately, for-profit school abuses did not end this year, but the industry did lose some steam. In addition to ongoing problems for current students, there are still many borrowers who attended unscrupulous schools in the past and remain mired in debt. (See articles in the Cleveland Plain Dealer and the New York Times describing the pain that borrowers feel long after predatory schools close). As Chadwick Matlin wrote in The Atlantic.com, “If you care about understanding the country’s student loan situation, the best place to start is with for-profit colleges.”
The Department of Education is trying again this year to develop a gainful employment rule to hold schools accountable for inferior programs. The latest round of rulemaking just ended in December and the outcome is unclear. (See this analysis by New America’s Ben Miller about some of the for-profit school industry’s particularly misleading arguments against the gainful employment rule). David Halperin of RepublicReport.org wrote about the intensive industry lobbying efforts that may once again end up gutting the Department’s efforts.
The next round of rulemaking in early 2014 will include a number of critical issues including determination of the credit criteria for parent PLUS loans. New America highlighted the dangers of propping up schools through PLUS loan borrowing.
Federal student loan defaults increased yet again this year, but there was still no action in Congress to provide relief for existing borrowers. The human toll of student loan defaults continued to mount while government collection powers were left unchecked. NCLC wrote in October about the ways in which debt collectors push families into poverty. The situation is particularly bleak for student loan borrowers who face the government’s draconian collection powers. We urge policymakers to consider our recommendations to give borrowers an opportunity for a fresh start. As we approach the holiday season and the start of a new year, we hope that these recommendations will become reality in 2014. As always, stay tuned!
