Student Union
Lessons in Finance Could Reduce Student Debt
Millions of student loan borrowers owe a collective $1.7 trillion in debt, but many commit to loans without knowing what they are signing up for, research shows.
Students lacking education in personal finance are more likely to underestimate future student loan payments, wrote Nikolaos Artavanis of Virginia Polytechnic University, and Soumya Karra of the University of Massachusetts.
Nearly 40% of borrowers who said they lacked understanding of how loans work underestimated their future payments by more than $1,000 a year, the researchers wrote in The European Journal of Finance in January 2020. Understanding their future financial commitment corrected their estimates by 17-18 percentage points.
And some borrowers concluded that although the educational benefits outweighed the disadvantages of taking on student debt, they would have borrowed less if they had understood the financial and mental strain those loans caused.
Student debt is a flashpoint for many Americans and a cause among politicians.
President Joe Biden has allocated $40 billion to help students with debt, emergency relief, tuition and housing.
Democratic Senator Elizabeth Warren and independent Senator Bernie Sanders have been vocal proponents of debt forgiveness for student borrowers.
How do students rack up debt?
Tuition and fees have been on the steady increase since the 1980s when state funding for higher education began a steady decline. Between 1995 and 2014, average annual borrowing by undergraduates increased about 75%. Among graduate students, average annual borrowing grew by 110%, according to a January 2020 Brookings Institution report.
While more than 40% of student loan borrowers leave school owing $20,000 or more, according to the Consumer Financial Protection Bureau (CFPB), Brookings has warned about attributing student debt as widespread.
In the student-loan landscape, 30% of undergraduates leave school with no debt and about 25% with less than $20,000, Brookings said.
“Despite horror stories about college grads with six-figure debt loads, only 6% of borrowers owe more than $100,000 — and they owe about one-third of all the student debt,” Brookings wrote.
And that 6% who owe more than $100,000 are typically borrowers who earned advanced degrees. Households with master’s, doctoral or other graduate degrees owed more than half of the outstanding education debt, Brookings reported in October 2020.
Medical school — which can cost $200,000 a year — is a prime example of a student borrower who owes massive amounts of debt.
Who needs the most help?
A lack of financial literacy is seen among first-generation students — the first in their families to go to college or university — and women, among all borrowers.
Of the nearly 40% in the Artavanis and Karra study who did not understand how the loans and their repayment worked, 33% were first-generation students, 26% were women, and 24% were minorities.
First-generation students lacking financial literacy are further hindered by language and culture to interpret and navigate student loan options and practices, according to Brookings.
Borrowers of federal loans are increasingly likely to be first-generation students, and first-generation borrowers were the most likely to default under crushing debt burdens, Brookings reported.
In the gender divide, a study by Lu Fan, assistant professor of personal financing at the University of Missouri, Columbia, and Swarn Chatterjee, professor of financial planning at the University of Georgia, in 2018 showed that women are less likely to be late on loans, but more likely to stress about it than men. Men are less likely to worry, even with a higher likelihood of being late on student repayments.
Younger borrowers showed the least financial knowledge, as did borrowers from underrepresented or lower socioeconomic backgrounds, according to Brookings.
Educating student borrowers
When students graduate or drop out of university, they have six months before they have to make payments on federal loans: 91.8% of student loans are issued by the federal government.
In 2020, approximately 20% of borrowers defaulted — or did not make a loan payment for 270 days — in the United States, according to a report by the Pew Research Center.
Even with various loan repayment options tied to income, such as Income-Contingent Repayment (ICR), Income-Based Repayment (IBR), and Pay as You Earn (PAYE), borrowers have reported they have not been informed of these options and have often gone to pay high monthly payments as a result, according to Fan and Chatterjee’s study.
“It is possible that adding a financial literacy component to the student loan repayment program could help the borrowers in making more informed student loan payment decisions in the future,” explained Fan.
Increasing financial technology education will have a positive impact on enhancing financial capability and increasing financial literacy, according to a study done by Georgios Panos of the University of Glasgow, and John Wilson of University of St. Andrews.
The researchers noted that financial literacy is important in maintaining a sound financial security and suggested that differences in financial learning acquired early in life, “can explain a significant part of financial and more general well-being in life.”
“In an era of mounting student debt, increased (digital) financial inclusion, and threats arising from instances of (online) financial fraud, financial education and enlightened financial advising appropriate policy interventions that enhance financial and overall well-being,” explained Panos and Wilson wrote in The European Journal of Finance in January 2020.
To encourage more financial literacy among borrowers, states have adopted changes in their legislation to encourage financial education, according to a 2020 report by the National Conference of State Legislatures. For instance, Arizona enacted a bill that allows a course in financial literacy to qualify as work activity. Additionally, Arizona has also appropriated $1 million to fund the provision of personal finance courses to high school students before graduation.
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Payments to college athletes to range from a few dollars to more than $1M under settlement
Thousands of former college athletes in the U.S. will be eligible for payments ranging from a few dollars to more than a million under the $2.78 billion antitrust settlement agreed to by the NCAA and five power conferences, a deal that also paves the way for schools to directly compensate athletes while attempting regulate payments from boosters.
Details of the sprawling plan were filed Friday in federal court in the Northern District of California, a little more than two months after the framework of an agreement was announced. The deal must still be approved by a judge.
"College athletes will finally be able to share in the billions of dollars their compelling stories and dynamic performances have generated for their schools, conferences, and the NCAA," the filing said. "This is nothing short of a seismic change to college sports following more than four years of hard-fought victories in this case."
The full term sheet includes guidelines on roster caps for individual sports that will replace scholarship limits; how the new financial payments will be monitored and enforced to ensure compliance by schools; how third-party payments to athletes will be regulated; and how nearly $3 billion in damages will be doled out over the next 10 years.
Those payouts will vary drastically and are determined by sport played, when, how long and what conference an athlete competed in. While Division I athletes across all sports will be eligible to collect damages, the majority of damages is expected to go to football and basketball players from power conferences because those leagues and teams generate most of the revenue that comes from billion-dollar media rights contracts.
The deal covers three antitrust cases — including the class-action lawsuit known as House vs. the NCAA — that challenged NCAA compensation rules dating to 2016. The plaintiffs claimed NCAA rules denied thousands of athletes the opportunity to earn millions of dollars off the use of their names, images and likenesses.
The NCAA lifted its ban on athletes earning money through endorsement and sponsorship deals in 2021.
The agreement does not settle the issue of whether college athletes should be deemed employees, but it does include language that would suggest the deal would be subject to change if "a change in law or circumstances permits collective bargaining."
The NCAA and college sports leaders continue to plead for help from Congress in the form of a federal law that would supersede state laws and allow the association and conferences to self govern without fear of future antitrust litigation.
"This settlement is an important step forward for student-athletes and college sports, but it does not address every challenge," the commissioners of the Atlantic Coast Conference, Big Ten, Big 12, Pac-12, Southeastern Conference and NCAA President Charlie Baker said in a joint statement. "The need for federal legislation to provide solutions remains. If Congress does not act, the progress reached through the settlement could be significantly mitigated by state laws and continued litigation."
While that help still seems unlikely to come soon — especially with a presidential election months away — college sports leaders hope the settlement can provide some certainty for schools and finally stem the constant legal attacks on its antiquated model of amateurism.
Paying athletes
The NCAA and conferences have agreed to amend their rules to permit a landmark compensation system that allows schools to share up to about $21 million in athletic revenues with their athletes annually, starting in 2025.
The NCAA and conferences will be permitted to make rules that prevent schools from circumventing the cap.
That number is derived from taking 22% of the average revenue generated through media rights contracts, tickets and other sources by power conference schools. The agreement will create an audit system that allows plaintiffs to monitor athletic revenue, which is expected to rise in the coming years as new media rights agreements kick in for conferences and the College Football Playoff.
Athletes are projected to receive $1.5 billion to $2 billion annually.
All athletes will be eligible to receive the new financial benefits, but each school will be permitted to determine how they want to divvy up the money among sports. How exactly Title IX gender equity rules apply is still unclear and will require federal clarification. How schools comply with Title IX will be the responsibility of each institution.
Scholarships and rosters
Replacing scholarship limits with roster caps could mean even more athletic scholarship opportunities in Division I.
Most notably, major college football teams will now be permitted to have 105 player on scholarship instead of the current 85, though schools will no longer be required to give full scholarships to every football player.
Partial scholarships have been used in some sports for years, but will now be permitted in all.
The roster caps for baseball (34), softball (25) and volleyball (18) will also allow for a significant jump in the number of scholarships schools can provide in those sports, though schools will not be required to meet the cap.
NIL deals and oversight
NCAA rules have been tweaked to allow schools to be more involved in providing NIL opportunities for college athletes, but they will still be allowed to strike deals with third parties.
However, athletes will be required to report deals with third parties that surpass $600 to an outside clearinghouse.
The NCAA is also creating a public database that it hopes will allow athletes to assess fair market value.
Booster-funded NIL collectives have become a common way athletes are compensated, but now those deals will be subject to review through an arbitration process to determine if it is for a "valid business purpose," according to the agreement.
Violations could lead to eligibility penalties for athletes and sanctions for schools.
Damage payments
The plaintiffs in the House case are responsible for doling out damages. Included in Friday's filing was a chart breaking down the categories of eligible athletes along with four different types of payouts they could be in line to receive.
According to the plaintiffs, about 19,000 power conference football players and men's basketball players will be in line to receive an average of $91,000, with payments ranging from $15,000 to $280,000 just for what is referred to broadcast name, image and likeness.
Some of those same athletes could also be in line for tens of thousands of dollars more related to lost opportunities to earn NIL money while in college and what is deemed by the plaintiffs as pay-for-play. Plaintiffs' lawyers say a few athletes will be eligible to receive upward of $1 million.
Next steps
Plaintiffs' attorneys say they will file a motion for preliminary approval and — if granted — a public website will go up in about two months where former college athletes can determine how much they are eligible to receive.
Still, the settlement is months away from final approval. There will be an opportunity for athletes who are members of the plaintiffs' class to object to the settlement and ask to be excluded. Already one school, Houston Christian, has objected — though the judge denied its request to intervene.
"We are moving forward in the right direction by giving college athletes what they have EARNED & DESERVE which has been long overdue," said Sedona Prince, a college basketball player now at TCU and one of the plaintiffs in the House case. "We still have a long way to go and I pray athletes ask more questions and demand more answers from the leaders at their schools, conferences and the NCAA."
Survey: US college students score low in civic literacy
A recent survey commissioned by the American Council of Trustees and Alumni found that college student in the United States are lacking in civic education.
Writing for Ed Source, Emma Gallegos reports that most of those surveyed don’t know the terms lengths for members of Congress, and a third couldn’t identify the speaker of the House of Representatives. (July 2024)
Tips for first-year international students in the US
Book your flights right away, get a U.S. phone plan, make sure you have linens for your dorm and attend orientation – that’s some of the advice international students have for first-year college students coming from abroad.
U.S. News & World Report compiled helpful tips for students studying in the United States for the first time. (July 2024)
Survey: Social integration, career prep are important to international students
A recent survey of international students in the United States found that before starting school, they were concerned about personal safety, making friends and feeling homesick.
Inside Higher Ed reports that international students want specialized orientations, peer connections, career preparation and job placement to help make their college experiences successful. (July 2024)
US advisory council ends Nigeria visit, signs student exchange deal
Members of a U.S. presidential advisory council have approved a student exchange deal between an American college and a Nigerian university as part of the council's effort to strengthen collaboration on education, health, entrepreneurship and development between Africa and Africans living abroad.
The council also visited a health facility supported by the United States Agency for International Development in the capital.
Nigerian authorities and visitors chatted with members of the U.S President's Advisory Council on African Diaspora Engagement as they toured a healthcare facility in Karu, a suburb of Abuja, on the last day of the council's three-day visit to Abuja and Lagos.
The facility is one of many supported by the United States Agency for International Development, or USAID, to improve the management of childhood illnesses, family planning, immunization and delivery.
The tour was part of the council's effort to promote African diaspora-led investments in technology entrepreneurship, education and healthcare delivery.
"They're doing a phenomenal job there, it really gave us a sense of what the healthcare system is in Nigeria," said Deniece Laurent-Mantey, executive director of the advisory council. "This is our first trip as a council to the continent and we chose Nigeria for a reason — the diaspora in Nigeria is very active, very influential, and they're really a source of strength when it comes to our U.S.-Africa policy. And so for us coming to Nigeria was very intentional."
The council was created by President Joe Biden in September to improve collaboration between Africa and its diaspora in terms of economic and social development.
Akila Udoji, manager of the Primary Healthcare Centre of Karu, said officials in Nigeria were pleased that the council members were able to visit.
"We're happy that they have seen what the money they have given to us to work with has been used to do, because they have been able to assist us in capacity-building, trainings, equipment supply and the makeover of the facility," Udoji said.
Earlier, the council signed a deal for a student exchange program between Spelman College in the southern U.S. city of Atlanta and Nigeria's University of Lagos.
Laurent-Mantey said education exchanges are one of the council's top priorities.
"In Lagos, we had the president of Spelman College — she's also a member of our council — she signed an agreement with the University of Lagos to further education exchange programs in STEM and creative industries between those two universities," Laurent-Mantey said. "And I think for us it's very important, because Spelman College is a historically Black university, and so here we are promoting the importance of collaboration between African Americans and Africans."
In March, the advisory council adopted its first set of recommendations for the U.S. president, including the student exchange initiative, advocating for more U.S. government support for Africa, climate-focused initiatives, and improving U.S. visa access for Africans.
The council met with Nigerian health and foreign affairs officials during the visit before leaving the country on Wednesday.
