Student Union
Student Loan Forgiveness Plan Receives More Scrutiny
Student loan forgiveness sounds like a good deal to many debtors, but since President Joe Biden suggested some form of federal student loan forgiveness, experts and debtors have been debating what that should look like.
“There isn't an American Dream anymore, especially if you went to college and had to borrow for it,” said Tracy Musick, who earned her master’s degree in library science from North Carolina Central University in 2011.
“I was actually in a better position when I was selling makeup, and didn't have a degree at all,” Musick said, adding that she would like to own a house and prosper on her own, but feels like she is weighed down by the debt.
Biden has suggested student loan debt forgiveness but has not yet published specific measures. Democratic Senators Chuck Schumer of New York and Elizabeth Warren of Massachusetts have proposed up to $50,000 in debt forgiveness, but no legislation has been formalized.
“The President continues to support the canceling of student debt to bring relief to students and families,” Biden press secretary Jen Psaki tweeted on February 4. “Our team is reviewing whether there are any steps he can take through executive action, and he would welcome the opportunity to sign a bill sent to him by Congress.”
But economic experts say the words “loan forgiveness” may lead to inaccurate assumptions.
“Overall, we find balance forgiveness to be a highly regressive policy,” wrote Sylvain Catherine, professor of finance at the Wharton School of the University of Pennsylvania, and Constantine Yannelis, a professor at the University of Chicago’s Booth School of Business, in The Distributional Effects of Student Loan Forgiveness.
Catherine and Yannelis say debtors in upper economic levels would receive a greater benefit than economically disadvantaged debtors, who need the relief the most, Catherine said in a Wharton podcast.
“If a comprehensive loan-forgiveness program were passed, we calculate that the average person in the top 10% of earners would receive $5,944 in forgiveness, while the average individual in the bottom 10 percent of earners would receive $1,070,” they wrote in The Washington Post.
Catherine told VOA that enrolling more people in income-driven repayment plans is better for the bottom 30% than forgiving $10,000, and it also is less expensive to taxpayers.
Student debt is a fierce topic for many Americans because it is larger than all credit card debt. Outstanding student loan debt is held by nearly 43 million people, totaling more than $1.5 trillion, according to Federal Student Aid. Many debtors say they cannot move on with life milestones, such as getting married, having children or buying a home, under so much debt.
Experts at the Brookings Institution in Washington point out that one-third of all student loan debt is owed by only 6% of borrowers, typically students pursuing or who achieved their master’s and doctoral degrees.
Cody Hounanian is a student debtor and program director at Student Debt Crisis, a nonprofit dedicated to reforming student debt and loan policies for higher education. Founded in 2011, it advocates for private and federal student loan borrowers in the U.S. and works with other national groups.
Student Debt Crisis and more than 325 organizations re-released a letter February 5 calling on Biden to forgive student loan debt.
“As a group that represents 2 million supporters with very diverse perspectives and experiences … we are very supportive of [forgiving] $50,000 in student loan debt,” Hounanian said.
Another strategy, Hounanian said, might include debt restructuring, meaning borrowers with high interest rates would be able to refinance at lower rates, similar to what homeowners do with their mortgages as those bank interest rates drop.
“I look at this as another common-sense solution because anyone with any other type of loan — including a car loan, or a home loan — they're familiar with the idea of refinancing,” he said.
A report by the Association of Community College Trustees in December 2020 found that, in the case of Valencia College students in Orlando, Florida, those who defaulted on their loans typically suffered academically.
“Default does not impact all borrowers equally: Students who have stopped out or who have completed some college credits but have not yet earned a degree or credential are especially at risk for default,” the report stated.
“Non-traditional-age students, students of color and low-income students are also at greater risk,” it stated. “The median defaulter owes less than $10,000, and students with the smallest amounts of debt are the most likely to default.”
As of 2019, Musick owed about $80,000 in federal loans for her master’s degree — plus at least $3,000 in interest. She said she currently is not sure how much she owes exactly.
“All of the payments that I've made have only been to interest — none of it has touched the principal,” she said. “That means that my loan is actually growing.”
But some others see student loan forgiveness in a different light.
“I’ve paid off nearly all of my student loan debt in the last 10 months and NOW there is talk of canceling it?!” Maria Ducato, of Florida, tweeted with a .gif of Friends actor Matthew Perry repeatedly banging his head against a plank.
“What about the people [like me] who minimized their need for student loans and then paid back those loans like a responsible adult?” replied Julie Coffman to Psaki’s tweet.
See all News Updates of the Day
College tuition has fallen significantly at many US schools, research finds
The cost of college keeps spiraling ever higher, right?
Not necessarily. New research indicates students are paying significantly less to attend public universities than they were a decade ago. And tuition increases at private colleges have finally slowed after years of hefty rises.
Figures compiled by the nonprofit College Board indicate the average student attending an in-state public university this year faces a tuition bill of $11,610, which is down 4% from a decade earlier when taking inflation into account. But the real savings come in what the average student actually pays after getting grants and financial aid. That's down 40% over the decade, from $4,140 to $2,480 annually, according to the data.
That reduced cost means less borrowing. Just under half of students attending in-state public universities are graduating with some debt, down from 59% a decade earlier, according to the College Board figures. And among those who do borrow, the average loan balance has fallen by 17%, to $27,100.
Meanwhile, at private colleges, tuition continues to rise, but at a much slower rate. It has increased 4% over the past decade, when taking inflation into account, to an average $43,350, according to the College Board. That's a big change from the two decades prior, when tuition increased 68%.
Costs are coming down as Americans question whether college is worth the price. Surveys find that Americans are increasingly skeptical about the value of a degree, and the percentage of high school graduates heading to college has fallen to levels not seen in decades, according to data from the U.S. Bureau of Labor Statistics.
Yet research still finds that, over time, a degree pays off. Americans with a bachelor's degree earn a median of $2.8 million during their careers, 75% more than if they had only a high school diploma, according to research from Georgetown University's Center on Education and the Workforce.
COVID effect
The COVID-19 pandemic has been a big factor in the cost reductions, said Jennifer Ma, an executive research scientist at the College Board and lead author of the study.
"We know that during COVID, a lot of institutions — public and private — froze tuition," Ma said.
As states and the federal government responded to the pandemic, Ma said, they increased higher education funding, allowing colleges to reduce the cost of attendance. Some of that money has since expired, however, including an infusion of federal pandemic aid that was mostly used up by the end of 2022.
Cost was a major consideration in Kai Mattinson's decision to attend Northern Arizona University. It would have cost her about $39,000 annually to attend the public university but discounts and scholarships bring that down to between $15,000 and $20,000 for the 22-year-old senior from Nevada.
"I originally wanted to go to the University of Arizona, but when it came down to tuition and other cost, Northern Arizona University was the best option," said Mattinson, a physical education major who also works as a long-term substitute at a local elementary school.
Many institutions have tried to limit cost increases. Purdue University in Indiana, for example, has frozen its annual in-state tuition at $9,992 for the past 13 years.
Mark Becker, the president of the Association of Public and Land-grant Universities, said he was pleased to see the new data.
"Institutional efforts to control costs, combined with many states' efforts to increase investments in public universities and federal investment in the Pell Grant, have increased college affordability and enabled significant progress on tackling student debt," Becker said in a statement.
Costs for those attending public two-year community colleges have fallen even more, by 9% over the past decade, according to the College Board data, which is broadly in line with federal figures collected by the National Center for Education Statistics.
Still, for parents paying for their children to attend out-of-state public universities or private colleges, the costs remain daunting — as much as $95,000 annually, in some cases. However, many institutions offer significant discounts to the sticker price for middle- and lower-income students.
Some private colleges have been expanding their financial aid, including the Massachusetts Institute of Technology, which in November announced undergraduates with a family income below $200,000 would no longer need to pay any tuition at all starting in the fall.
Other private colleges are discounting tuition as a marketing move in an increasingly difficult environment. They face a dwindling pool of young adults, and students who are more wary of signing up for giant loans. Recruiting students is crucial for staying afloat as operational costs rise. After temporary relief thanks to federal money during the pandemic, many colleges have cut programs to try to keep costs under control.
As regional schools struggle to survive, AI could provide hope
Declining enrollments are causing problems for some smaller, regional colleges struggling to survive.
But schools that embrace artificial intelligence and customer experience could be at an advantage, Eric Skipper writes in Times Higher Education. (December 2024)
Universities move away from DEI initiatives
Diversity, equity and inclusion initiatives have fallen out of favor in higher education recruiting and hiring in recent years, but even more colleges and universities are moving away from the programs now, Thea Felicity reports in University Herald.
In addition to political opposition to the programs, there are concerns that DEI initiatives hinder free speech, affect ideological balances and discourage academic freedom. (December 2024)
‘College Deserts’ leave many communities without higher education options
“College Deserts” – areas where high schools are located more than 30 miles away from the nearest community college – leave large groups of people unable to pursue higher education because of transportation problems, Lexi Lonas Cochran writes in The Hill.
Most college deserts are in the Southern U.S., with a recent study in Texas showing that long commuting distances discourage many potential students from attending college. (December 2024)
Analysts say rate of college closures likely to increase
If current trends continue, the rate of college closures is expected to increase, according to a new study reported in Forbes.
Closures are more likely to affect private institutions, and while the number of closures might seem small on a national level, it could cause serious problems for the smaller and mid-sized communities where those colleges are located. (December 2024)
