Student debt

March 27, 2023

President Joe Biden's student loan forgiveness program may face a new threat from Senate Republicans even before the US Supreme Court rules on whether it can be implemented.

March 10, 2023

A growing number of American high schoolers are taking a look at college — and taking a pass. College enrollment for recent high school graduates rose for decades, peaking at 70.1 percent in 2009, according to the U.S. Bureau of Labor Statistics, before fluctuating for a decade — and plummeting 8 percent from 2019 to 2022, The Associated Press reports. "The slide in the college-going rate since 2018 is the steepest on record," especially for men. U.S. Bureau of Labor Statistics "With the exception of wartime, the United States has never been through a period of declining educational attainment like this," and "it is literally cataclysmic," Michael Hicks, director of the Center for Business and Economic Research at Ball State University's Miller College of Business, told The Hechinger Report at the start of the 2022-23 school year. "It's quite a dangerous proposition for the strength of our national economy," Zack Mabel, a Georgetown researcher, tells AP. What are the commentators saying? It's pretty clear the COVID-19 pandemic "reversed decades of progress" in rising college enrollment numbers, AP reports. "Rates fell even as the nation's population of high school graduates grew, and despite economic upheaval, which typically drives more people into higher education." "The pandemic certainly made things worse," but the downturn in college enrollment "took hold well before it started," Jon Marcus writes at The Hechinger Report. "Focus groups and public opinion surveys point to other, less easily solved reasons," including "widespread and fast-growing skepticism about the value of a degree, impatience with the time it takes to get one, and costs that have finally exceeded many people's ability or willingness to pay." Colleges "continue to advertise prices that few consumers actually pay but that discourage many from applying," Marcus reports, and "more than 4 in 10 bachelor's degree holders under 45 don't agree that the benefits of their educations exceeded the costs, according to a survey by the Federal Reserve." Add in the average $31,000 in student debt owed by today's graduates — a 317 percent rise since 1971, adjusted for inflation — and the student loans many high schoolers' parents are still paying back, he adds, and "that adds up to a lot of bad reviews passed down to younger siblings and classmates, for whom family and friends are the most trustworthy sources about whether to go to college."  "We are heading into a world where a flat screen TV that covers your entire wall costs $100, and a four year college degree costs $1 million, and nobody has anything even resembling a proposal on how to systemically fix this," Silicon Valley investor Marc Andreessen wrote in a recent Substack post. Along with the "perception that cost is out of control," "anti-elitism, anti-institutionalism" has fed a sharp drop in Americans' faith in higher education from 2015 to 2019, Gallup's Stephanie Marken says. At the same time, "many jobs that previously required a college degree can now be filled by people with vocational training or apprenticeships," Matthew Lynch writes at The Edvocate. And "there is a growing recognition that college is not the right path for everyone. Some students may have other priorities or interests that require them to pursue other paths, such as starting their own business or pursuing a career in the arts. Others simply may not be a good fit for the academic rigor and structure of college and may thrive better outside of the classroom." What's next? Dropping enrollment is bad for colleges, but the U.S. economy could ultimately take a hit, too, AP reports. "Fewer college graduates could worsen labor shortages in fields from health care to information technology."  Having a college degree also leads to better economic outcomes for individuals, including more job resilience when the economy turns sour. People without a college degree can also expect to earn 75 percent less over their lifetime — or $1 million less — than those with a bachelor's degree, according to Georgetown University's Center on Education and the Workforce. And more than half of "good jobs" call for at least a bachelor's degree.  Pew Research Center The millions of missing college-educated workers will cost the U.S. $1.2 trillion in lost economic output over the next decade, the center-right American Action Forum estimates. The U.S. was No. 2 among developed nations in 25- to 34-year-olds with bachelor's degrees in 2000, and now it's 16th, The Hechinger Report's Marcus writes, citing a University of Pennsylvania analysis. In that time, the Top 15 developed nations, on average, have increased bachelor's degree attainment by 177 percent. On the other hand, the U.S. hasn't been sliding backwards. There were 21.3 million more Americans with bachelor's degrees in 2021 than in 2001, according to the U.S. Census Bureau, and between 2011 and 2021, the share of people age 25 and older with a bachelor's degree or higher increased by 7.5 percentage points to 37.9 percent, from 30.4 percent. U.S. Census Bureau U.S. colleges can "improve their value proposition" by better addressing the needs of today's students, including "reducing the time commitment, cost, and in-person requirements" while "increasing the relevancy of today's curriculum to include a focus on preparing students for a technology-driven, skills-based economy," suggests Daniel Rosensweig, CEO of education technology firm Chegg.  "Educational technology and remote learning are not a panacea — there will always be a place for the in-person pedagogical experience," he adds. But more than a third of today's college students are 25 or older, 24 percent are parents, and 64 percent work full- or part-time jobs, according to the Lumina Foundation, and "we cannot cling to the model of the 18-year-old college student with no other demands on their time" anymore. 

January 11, 2023

The Biden administration has released a new student loan repayment plan that is expected to make college "more affordable and manageable than ever before." Here's everything you need to know: What are the details of the plan? The Department of Education (DOE) called the new plan a "student loan safety net" that prevents borrowers from being overwhelmed by debt, per The Associated Press. It revises one of the current income-driven payment plans known as REPAYE, where monthly payments are determined by the borrower's income and then the remaining loan is forgiven after 20 years. The Education Department's updated plan would make the process more forgiving, The New York Times explains. First, undergraduate loan payments would be reduced to 5 percent of discretionary income, compared to 10 percent in the old REPAYE plan. Discretionary income is the amount of money left over after paying expenses. Graduate loan debt would be set at 10 percent of discretionary income, but if you have both, it would be weighted.  Low-income borrowers might also be eligible for $0 monthly payments if they are not making 225 percent of the federal poverty level. "That means a single borrower earning less than $30,500 a year and a borrower in a family of four making less than $62,400 would not be required to make monthly payments on their loans," The Washington Post reports. Additionally, those who took out smaller loans would also have their debt forgiven in 10 years, rather than in 20 years. The biggest change is that the borrower's loan balance would not increase over time, even if they currently are not making payments.  It is not yet clear when the new plan would be implemented.  What kind of savings would you see? The most significant savings would go to those with undergraduate debt, since their monthly payments would be reduced. "These proposed regulations will cut monthly payments for undergraduate borrowers in half and create faster pathways to forgiveness, so borrowers can better manage repayment, avoid delinquency and default, and focus on building brighter futures for themselves and their families," said Education Secretary Miguel Cardona. Also, low-income borrowers would pay an average of "83 percent lower per dollar borrowed over their lifetimes," writes the Times. High-income earners would see a 5 percent decrease in payments. "We are, for the first time, creating a true student-loan safety net in this country," Undersecretary of Education James Kvaal told reporters.  What are the criticisms of the program? The Office of Federal Student Aid (FSA) has been vocal about the pressure it would face implementing the new plan. The FSA and DOE "must now safeguard priorities ... while also scrambling to find hundreds of millions of dollars to cut from other current and future programs," according to NPR. This is because Congress' omnibus spending bill did not allocate enough for the FSA to fulfill everything on its agenda. In 2022, the FSA had a budget of $2 billion; in the original 2023 budget proposal, the Biden administration wanted to raise the budget to $2.65 billion. Republicans counteroffered with a 20 percent increase for the FSA, which was lower than what the administration wanted, but still an increase. "There was a proposal put forward to the White House to say, 'Listen, we'll give you an extra couple hundred million dollars here, in order to focus on improvements … for the student loan program,'" a source told NPR. "But that came with a tradeoff." The tradeoff was that none of the funding could go to Biden's loan relief program. In turn, the Senate version of the bill provided "no new funding for the implementation of the Biden administration's student loan forgiveness plan." Democrats did not want an exception like that specifically noted, and rejected the proposal. Republicans "refused to agree to additional money for FSA without a debt relief exception," explains NPR. As a result, the agency received the same budget as last year, with more agenda items to cover.  Another concern is that the debt relief program will subsidize predatory schools "because borrowers with the lowest earnings — perhaps because they graduated from, or left, poor-performing programs — receive some of the biggest benefits," MarketWatch explains. As Kvaal echoed, "It's time to name names about these programs and have a frank conversation about the root causes of student debt."

January 10, 2023

The White House is moving forward with a proposal that would lower student debt payments for millions of Americans now and in the future.



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