Student loan debt in America exceeds 1 Trillion

864 Billion in Federal Loans150 Billion in Private Loans

Source: Center for American Progress, The Student Debt Crisis, October 2012

Positive impact on persistence of Hispanics and African American students as compared to white students (Hu & St. John, 2001).

Student loans negatively impacted African American student enrollment (Perna, 2000).

Loans negatively impact access, persistence and degree completion, especially for low and middle income students (Dowd & Coury, 2006; (Paulsen & St. John, 2002; Kim, 2007) .

Incurring credit card and student loan debt has become an unavoidable norm for college students regardless of the type of institution they attend (Pinto & Mansfield, 2006).

Borrowers who drop out of college are more likely to default than those who attain a degree (Gladieux & Perna, 2005).

Completion leads to successful repayment (Gross, Cekic, Hossler, & Hillman, 2009).

8 out of 10 young people in families earning $99,000 per year or more earn a bachelor’s degree by age 24; among families earning less than $33,000 per year, however, the attainment rate drops to 1 in 9.

Source: Dannenberg & Voight (2013)

Subsidized Loans are Need Based (3.4 interest rate)Unsubsidized Loans are non-Need Based (6.8

interest rate)Dependent undergraduates

YearMax. (subsidized and

unsubsidized)

First year $5,500 — no more than $3,500 of this amount may be subsidized

Second year $6,500 — no more than $4,500 of this amount may be subsidized

Third year and beyond $7,500 — no more than $5,500 of this amount may be subsidized

Aggregate 31,000 (23,000 can be subsidized)

Independent undergraduates(and dependent undergraduates whose parents are unable to borrow under the PLUS Loan Program)

YearMax. (subsidized and

unsubsidized)3

First year $9,500 — no more than $3,500 of this amount may be subsidized

Second year $10,500 — no more than $4,500 of this amount may be subsidized

Third year and beyond $12,500 — no more than $5,500 of this amount may be subsidized

Aggregate 57,500 (23,000 can be subsidized)

Graduate Students eligible for Unsubsidized loans only as of July 1, 2012; annual limit is $20,500, Aggregate limit is $138, 500

*Source: TG Online, www.tg.org

Problem: Due to increase in college costs low income borrowers forced to borrow combination of Sub/Unsub loans while more affluent borrowers who attend prestigious/high cost universities eligible for Subsidized loans

Solution: Increase Subsidized loan limits and change criteria for eligibility for low-income/Pell-eligible borrowers only

Problem: Part time students are able to borrow the same amount of loans as full time borrowers which causes them to go into as high or higher levels of debt

Solution: Align loan eligibility amounts with Pell grant eligibility; loan award amounts should be based on actual number of hours enrolled

Problem: Too many options for students; confusion on which repayment plan to select

Standard Repayment Plan Graduated Repayment Plan Extended Repayment Plan Income-Based Repayment (IBR) Plan Income-Sensitive Repayment Plan Income-Contingent Repayment Plan Pay As You Earn Repayment Plan

Solution: Create a universal Income Based Plan as the default repayment option for all borrowers

*Source: Department of Education; 2010 2yr rate was 9.1; 3yr 2010 rates released in September 2013

*3yr 2009 National Rate is 13.4% *Official 3yr 2009 Rates as of August 2012 for Texas (16.1) New York (10.9) New Mexico

(12.5) Florida (16.2) California (11.9) and Arizona (22.9)

Old Measurement: The percentage of the number of the school’s FFEL and Direct Loan borrowers who enter repayment in one federal fiscal year who default in that federal fiscal year or by the end of the next federal fiscal year

Beginning with the 2009 cohort:Borrowers who default in that federal fiscal year or by the end of the next two federal fiscal years

*Source: Department of Education, August 2012

Target students (transfers) that have borrowed more than 90% of the national average (20-23k) and have not completed atleast 50% of their degree plan

Require Financial Literacy Courses for incoming freshman and students who become ineligible due to Academic (SAP) reasons

Require schools to implement intermediate loan counseling sessions for at-risk populations

Include annual notices/acknowledgement/repayment amounts to students on current debt before they accept new loans

Offer repayment incentives for On-Time Graduation

College Scorecardhttp://collegecost.ed.gov/scorecard/Shopping Sheethttp://collegecost.ed.gov/

shopping_sheet.pdfNet price calculatorhttp://netpricecalculator.collegeboard.org/The Chronicle of Higher Education’s

College Reality Checkhttp://collegerealitycheck.com/

Student Loans are not going awayAddressing College Affordability and

College Completion issues will help minimize the student loan debt crisis

“Federal Policy should prioritize assisting low-income students to access and complete postsecondary education with a simplified process supported by incentives for continuous enrollment and timely completion” (Santiago, 2013, pg 3).

Reimagining Aid Delivery and Design (RADD) Project, Bill and Melinda Gates Foundation, 16 different organizations received funding and have released policy briefs and white papers (Round 2 coming March 2014)

Rebalancing resources and incentives in federal student aid, New America Foundation, January 2013

Aligning the Means and Ends: How to Improve Federal Student Aid and Increase College Access & Success, Project on Student Debt, The Institute for College Access & Success, (TICAS) February 2013

Doing Away with Debt, The Education Trust, February 2013 The Student Debt Crisis, Center for American Progress, October

2012 Federal Student Loan Debt Burden of Noncompleters, US

Department of Education, NCES, April 2013 Forever in your debt: Who has student loan debt and who’s

worried?, The Urban Institute, June 2013 Keeping College Within Reach Hearings, Education & Workforce

Committee, Subcommittee on Higher Education and Workforce Training

Dannenberg, M., & Voight, M., (2013, February). Doing away with debt: Using existing resources to ensure college affordability for low and middle income families. Retrieved from The Education Trust website: http://www.edtrust.org/sites/edtrust.org/files/Doing_Away_With_Debt_1.pdf

Dowd, C.A., & Coury, T. (2006) The effect of loans on the persistence and attainment of community college students. Research in Higher Education, 47(1), 33-62

Gladieux, L., & Perna, L. (2005). Borrowers who drop out: A neglected aspect of the college student loan trend. Retrieved from The National Center for Public Policy and Higher Education website: http://www.highereducation.org/reports/reports_center_2005.shtml

Gross, J.P.K, Cekic, O., Hossler, D., & Hillman, N. (2009). What matter in student loan default:

A review of the research literature. Journal of Student Financial Aid, 39(1), 19-29.

Hu, S., & St. John, E. (2001) Student persistence in a public higher education system: Understanding racial and ethnic differences. The Journal of Higher Education, 72(3), 265-286

Kim, D. (2007). Multilevel analysis of the effect of loans on students’ degree attainment:

Differences by student and institutional characteristics. Harvard Educational Review, 177(1), 64-100.

Perna, L.W. (2000). Differences in the decision to attend college among African Americans, Hispanics, and whites. The Journal of Higher Education, 71(2), 117-141.

Paulsen, M., & St. John, E.P. (2002). Social class and college costs: Examining the financial nexus between college choice and persistence. Journal of Higher Education, 73(2), 189-236.

Pinto, M.B., & Mansfield, P.M. (2006). Financially at-risk college students: An explaratory investigation of student loan debt and prioritization of debt repayment. Journal of Student Financial Aid, 36(2), 22-32.

Santiago, D. A. (2013). Using a Latino lens to reimagine aid design and delivery. Retrieved from the Excelencia in Education website: http://www.edexcelencia.org/sites/default/ files/latinolenswhitepapermarch2013.pdf