Student loan debt, equity, and forgiveness

First of all, thank you for the warm welcome to this new blog. As soon as I published the first post, I came down with Covid and now, two weeks later, I’m digging my way through emails, tweets and LinkedIn messages. Thank you and I’m catching up!

On May 16, I sat down with Terry Hartle and John Fansworth at the American Council on Education, The Policy and Politics of Student Lone Forgiveness, in May. I try to attend these monthly sessions whenever possible and often recommend them to my students.

I started my career in higher education in a financial aid office and was given loan responsibilities – especially debt collection. That was more than 30 years ago. I started managing the organization’s Perkins loan program and then took out personal loans for Stafford, Plus and the family. In this role, I was the main contact with the collection agencies and it was brutal. I also conducted exit interviews with students and, finally, created budgeting workshops. This initial introduction of financial aid has shaped my outlook on my work ever since. While we have made significant improvements in loan servicing and repayment, student loans have become crippling for many of our young people.

Terry and John have done a great job setting the stage for their session on student debt forgiveness. They noted that there are currently seven federal student loan programs, 16 repayment options and an estimated 45 million borrowers involved. It will take a lot. It is complex and seems to be as much political as it is easy to implement policy solutions.

The same Monday in the ACE policy pop-up, Tom Harnish’s morning email included reports on student loans and at least 8 links to mainstream press articles and op-eds. The first link was a NASFAA report – Protecting Borrowers and Promoting Equity. The title of some of the articles says:

  • The Washington Post (Posted: May 16, 2022)

  • Op-ed: Student debt is crushed. Canceling it is still a bad idea for everyone. New York Times (Post Date: May 14, 2022)

  • Student borrowers are not eligible for ‘forgiveness’. They deserve forgiveness. New York Times (Post Date: May 13, 2022)

For those who have time to go through the recommendations, I recommend the NASFAA report. It focuses on three main areas: Student Loan Servicing, Student Loan Payment and Student Loan Default. If this is your thing, it’s definitely worth a read.

The report emphasizes the ছাত্র 1.6 trillion in outstanding student loans and echoes a recurring theme that the situation is a “symptom” of a flawed system. Solutions require a systematic approach, and from what Terry and John are saying, it seems that the easier the approach, the more political it will become. One approach might be to “forgive” up to 10k for each borrower (undergraduate and graduate) with a household income below 125k and it seems that this may soon become a reality. Inside Higher Aid is the latest here this morning.

In my two weeks of cowardly smoke, it seems that student loan commentary has multiplied rapidly. I will direct the people in this fantastic part of the NY Times to turn my sister sociologist, Tracy Macmillan Cottom, America’s greatest vehicle of social mobility into a loan device. And then a study is highlighted at the AERA Open that takes an equity lens for debt repayment behavior – like any other trap: the student debt repayment circuit path. The author studies the types of student loan repayments and identifies five types of loan repayments: persistent defaulters, perpetual payers, fast full payers, late full payers, and consolidators. They have separated the data based on the borrower race / ethnicity, social class and institutional sector to analyze the stratification of the borrower.

Readers, what are your thoughts on the politics of student loan waiver? Should I be interviewed on this topic for future blog posts?

Mary Churchill is the former head of policy and planning at Boston City Mayor Kim Jenny and the current associate dean for strategic initiatives and community engagement and director of the Higher Education Administration Program at the Wheelk College of Education and Human Development at Boston University. He is the co-author of When College Close: Leading in a Time of Crisis. She is on Twitter @mary_churchill and can be reached by email [email protected]

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