Explore the full series of eCampus News podcasts hosted by Kevin Hogan—created to keep you on the cutting edge of innovations in education.
What’s the state of student loans for American higher ed, and how is that situation likely to develop in the future? A new Bloomberg investigation yields some important and disturbing insights.
I’ll put out some key details here.
…and just to deflate any narrative tension you might be experiencing, dear reader, there aren’t many surprises. If you’ve been paying attention to student loans, that is.…Read More
Last month, a group of six senators introduced a bill designed to help prevent unnecessary student loan debt by encouraging greater transparency. The “Know Before You Owe Act” would, among other features, require colleges to counsel students on financial aid before they agree to expensive student loans.
And with good reason. The obligations of some 43 million student borrowers now exceed $1.3 trillion, having long ago surpassed credit card debt as the country’s second biggest source of personal debt. It’s a challenge that stems from the rising cost of higher education, but it’s exacerbated by the complexity of an aid system that puts a heavy burden on financial aid staff and can leave students and families guessing about the real cost of college.
Research suggests that one in five student-loan holders does not understand the terms of his or her loan, and about half of students can’t accurately identify the cost of their first year of college within $5,000. Brookings estimates that more than half of first-year students seriously underestimate how much they actually borrowed. And that lack of understanding can lead to overborrowing at critical points in a student’s higher-ed journey.…Read More
After wrapping up a nine-month electrician training program at Everest College-San Bernardino in 2011, Kenneth Dewar hoped to get the career placement assistance he had been promised.
Then he spotted his own photo on a campus wall featuring “successfully placed” graduates. The school had counted his sporadic gigs as a freelance audio engineer, work he secured before ever enrolling.
“I was a mark in their book, and they didn’t want to change it,” said Dewar, 39, whose attempts to get placement assistance went nowhere.…Read More
Editor’s note: This story has been updated to reflect changes in data.
According to an upcoming report from Junior Achievement and PwC, nearly a quarter of today’s students believe that after they complete college their student loan debt will be forgiven. Yet, 41 percent default on their loans. There’s a financial literacy disconnect going on between reality and today’s students, but it’s not just worrisome for bank accounts—it’s affecting colleges, business and the global economy.
In the Organization for Economic Co-operation and Development’s (OECD) latest global assessment, more than 1 in 6 U.S. teens are unable to make even simple decisions about everyday spending, and only 1 in 10 can solve complex financial tasks.…Read More
Banks wrote off $3 billion of student loan debt in the first two months of 2013, up more than 36 percent from the year-ago period, as many graduates remain jobless, underemployed or cash-strapped in a slow U.S. economic recovery, an Equifax study showed, Reuters reports. The credit reporting agency also said Monday that student lending has grown from last year because more people are going back to school and the cost of higher education has risen.
“Continued weakness in labor markets is limiting work options once people graduate or quit their programs, leading to a steady rise in delinquencies and loan write-offs,” Equifax Chief Economist Amy Crews Cutts said in a statement.
Equifax analyzes data from more than 500 million consumers to track financial trends……Read More
In an effort to reduce student loan default rates, some colleges and universities are launching programs to improve student-loan literacy and, in a few cases, offer other kinds of financial assistance to students so they don’t get too deep into debt, says the Hechinger Report. Syracuse University, for instance, identifies students who are over-borrowing from private lenders and helps them stop by giving them direct grants for future semesters averaging $5,000 to $7,000 per year. Called the Money Awareness Program, the initiative has reduced the average debt of about 100 students each in their sophomore, junior and senior year by $21,000 each. In exchange, recipients are required to attend money-management courses once a semester until they graduate. Alvernia University, a Catholic liberal-arts college in Pennsylvania where 86 percent of undergraduates have some type of loan averaging about $10,000, requires that all of its incoming students take an hour-long financial management seminar…
…Read More
President Barack Obama would make tax credits for college expenses permanent and expand Pell grants for students from lower-earning families. The Republican team of Mitt Romney and Paul Ryan would emphasize the need to curb rising tuitions and federal education spending that are burdening families and the government.
The different approaches to coping with growing college costs highlight one way that Obama and the GOP ticket are competing for young voters. This important group leaned heavily toward Obama in 2008 and still prefers him, according to polls, though less decisively.
Tuitions and fees for four-year public colleges grew by 72 percent above inflation over the past decade, averaging $8,244 last year, according to the College Board, which represents more than 6,000 schools.…Read More
The Senate rejected dueling Democratic and Republican plans on May 24 for averting a July 1 doubling of interest rates on federal college loans for 7.4 million students, pushing back efforts to resolve the election-season showdown until next month.
In mostly party-line roll calls, senators voted 62-34 against the GOP package and 51-43 for the Democratic version, with each proposal falling short of the 60 votes needed for approval to avoid a filibuster.
Though both defeats were preordained, the twin votes gave lawmakers from each party a chance to show they favor easing students’ financial burdens—and potential grist for campaign ads accusing the other side of opposing the effort.…Read More
Senate Republicans blocked a Democratic bill May 8 to preserve low interest rates for millions of college students’ loans, as the two parties engaged in election-year choreography aimed at showing each is the better protector of families in today’s rugged economy.
The 52-45 vote to begin debating the legislation fell eight votes short of the 60 needed to proceed and stalled work on an effort both parties expect will ultimately produce a compromise, probably soon.
For now, each side is happy to use the stalemate to snipe at the other with campaign-ready talking points while they are gridlocked over how to cover the $6 billion cost.…Read More
President Barack Obama will try to add the cost of college to the campaign debate this week as he travels to campuses in three swing states calling on Congress to prevent a hike in student-loan interest rates this summer.
But the Republicans’ presumptive nominee, Mitt Romney, moved quickly to forestall the issue, indicating that he would rather let Obama claim a victory on student loan rates than risk a political pummeling for his party on the subject.
More than 7 million students who need to take out new loans this year face a doubling in student loan interest rates under the popular Stafford loan program unless Congress votes to keep current rates in place.…Read More