“The proposal does little for borrowers struggling to repay student loans in today’s distressed job market [and] does not address the real student debt problem: rising tuition and the lack of well-paying jobs,” Sampson said.
Last year, Congress passed a law that lowered the repayment cap and moved all student loans to direct lending by eliminating banks as the middlemen.
Before that, borrowers could get loans directly from the government or from the Federal Family Education Loan Program; the latter were issued by private lenders but basically insured by the government. The law was passed along with the health care overhaul with the anticipation that it could save about $60 billion over a decade.
Today, there are 23 million borrowers with $490 billion in loans under the Federal Family Education Loan Program. Last year, the Education Department made $102.2 billion in direct loans to 11.5 million recipients.
Meanwhile, the Education Department and the Consumer Financial Protection Bureau announced a project Tuesday to simplify the financial aid award letters that colleges mail to students each spring.
A common complaint is that colleges obscure the inclusion of student loans in financial aid packages to make their school appear more affordable, and the agencies hope families will more easily be able to compare the costs of colleges.
Separately, James Runcie, the Education Department’s federal student aid chief operating officer, told a congressional panel Tuesday that the personal financial details of as many 5,000 college students were temporarily viewable on the department’s direct loan website earlier this month.
Runcie said site was shut down while the matter was resolved, and the affected students have been notified and offered credit monitoring.
Copyright 2011, The Associated Press, with additional reporting by the Connecticut Post (Bridgeport, Conn.). Visit the Connecticut Post online at www.ctpost.com. Distributed by MCT Information Services.
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