Student Loan Debt, Equity, and Forgiveness

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Higher Ed Policy

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

On May 16, I sat in on May’s Public Policy Pop-Up at the American Council on Education, The Policy and Politics of Student Loan Forgiveness, with Terry Hartle and Jon Fansworth. I try to attend these monthly sessions when possible and often recommend them to my students.  

I began my career in higher ed in a financial aid office and I was put in charge of loans- specifically loan collection. That was over 30 years ago. I started out managing the institution’s Perkins loan program and then took on the Stafford, PLUS, and private loans for families. In this role, I was the main liaison with collection agencies and it was brutal. I also ran exit interviews with students and, eventually, created budgeting workshops. This early start in financial aid has  framed my approach to my work ever since. While we have made many improvements to loan servicing and repayment, student debt has become crippling for so many of our young people.

Terry and Jon did a great job of setting the stage for their session on student loan forgiveness. They pointed out that there are currently seven federal student loan programs, 16 repayment options and approximately 45 million borrowers involved. It's a lot to take in. It’s complicated and it seems like the easier to implement policy solutions are also more politically fraught.

On the same Monday as the ACE policy pop-up, Tom Harnisch's morning email included no less than 8 links to reports and mainstream press articles and op-eds about student loans. The first link was to a report from NASFAA - Protecting Borrowers and Advancing Equity. The titles to some of the articles are telling:

• Biden plunges into the risky politics of student loan debt The Washington Post (Date posted: May 16, 2022)

• Op-ed: Student Debt Is Crushing. Canceling It for Everyone Is Still a Bad Idea. The New York Times (Date posted: May 14, 2022)

• Student Loan Borrowers Don’t Deserve ‘Forgiveness.’ They Deserve an Apology. The New York Times (Date posted: May 13, 2022)

For those with time to wade through the recommendations, I recommend the NASFAA report. It focuses on three main areas: student loan servicing, student loan repayment, and student loan default. If this is your thing, it is definitely worth a read.

The report stresses the $1.6 trillion in outstanding student loan debt and, echoing a recurring theme, that this situation is a "symptom" of a flawed system. Solutions require a systemic approach and from what Terry and Jon were saying, it seems that the more streamlined the approach, the more political it becomes. One approach might be to "forgive" up to 10k for each borrower (undergraduate and graduate) with a household income under 125k and it looks like that might become a reality sooner rather than later. This morning’s Inside Higher Ed has the latest here. 

During my two plus weeks of COVID haze, it feels like the commentary on student loans has multiplied exponentially. I would direct people to this fantastic piece in the NY Times from my sister sociologist, Tressie McMillan Cottom,  America Turned the Greatest Vehicle of Social Mobility Into a Debt Machine. And then there is a study highlighted in AERA Open that takes an equity lens to loan repayment behavior -.Like Any Other Trap: The Circuitous Path of Student Loan Repayment. The authors studied patterns of student loan repayment and identified five types of loan repayment: persistent defaulters, perpetual payers, rapid full payers, late full payers, and consolidators. They also disaggregated data based on borrower race/ethnicity, social class, and institutional sector to analyze borrower stratification. 

Readers, what are your thoughts on the politics of student loan forgiveness? Who should I interview on this topic for a future blog post?

Mary Churchill is the former chief of policy and planning for Mayor Kim Janey in the city of Boston and current associate dean for strategic initiatives and community engagement and director of the higher education administration program at Wheelock College of Education and Human Development at Boston University. She is co-author of When Colleges Close: Leading in a Time of Crisis. She is on Twitter @mary_churchill and can be reached by email at marylchurchill@gmail.com.

 

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