(aka The Student Loan Program)
Student debt has more than doubled over the last two decades. As of September 2022, about forty-eight million U.S. borrowers collectively owed more than $1.6 trillion in federal student loans. Additional private loans bring that total to above $1.7 trillion, surpassing auto loans and credit card debt.
• Why Aren’t Student Loans Simple? Because This Is America. (Ron Lieber,Student Loan Debt Relief, NY Times, 9-3-22) Instead of making higher education free, we subsidize it later through repayment plans and attempts at debt cancellation. The complexity is disrespectful. If we want higher education to cost less, we should make it cheaper when people enroll.
• The Subprime Loans for College Hiding in Plain Sight (Ron Lieber, Student Loan Debt Relief, NY Times, 9-17-22) Many families can borrow most of the cost of college using a Parent PLUS loan. This will not end well.
“The honest truth is that Congress created a subprime lending program unintentionally,” said Rachel Fishman of New America, the left-leaning think tank. Most parents don’t pay for college using this loan. But about 3.6 million of them — with about $107 billion in outstanding debt — have. Within that group are a number of low-income Black families at schools that may not have given their kids enough help in the way of scholarships. Many of those families are struggling to repay the money that the federal government so freely offered up.
An Urban Institute report from 2019 summed up the sorry state of affairs in this way: Parent PLUS loans are “a no-strings attached revenue source for colleges and universities, with the risk shared only by parents and the government.” "Unlike student loans ... Parent PLUS loans are not going to help them earn more. Repayment can last up to 25 years, which can push the bills well into what are supposed to be the retirement years."
• Is Rising Student Debt Harming the U.S. Economy? (Backgrounder, Council on Foreign Relations, 10-20-22) Covers the main issues and links to many other articles, from various angles, about the student debt problem.
• Three Questions About Student Debt Forgiveness (Roger W. Ferguson Jr., Council on Foreign Relations, 9-6-22) What is the rationale behind President Biden's recent student debt relief announcement, who benefits and pays for it, and finally, what might be some unintended consequences from it? The Biden program might be overly generous, particularly given the strongest argument for such a program is to help the neediest. Most importantly, the fundamental weaknesses of the American higher education system—low completion rate, dependence on loans, and rapidly increasing college costs—still need to be addressed.
• Defending Student Loan Cancellation (National Consumer Law Center, 2-28-23) Two cases before the U.S. Supreme Court challenge President Biden’s transformational plan to cancel up to $20,000 in student debt for eligible borrowers. The outcome of these cases will affect millions of borrowers who are eligible for relief. National Consumer Law Center (NCLC) experts are providing analysis and resources about the cases: Biden v. Nebraska (22-506) and Department of Education v. Brown (22-535). Excellent links and references, especially for students seriously debating the issues.
• Biden’s Student Loan Plan Squarely Targets the Middle Class (Jim Tankersley, NY Times, 8-25-22) The big winners from Mr. Biden’s student loan plan are not rich graduates of Harvard and Yale, as many critics claim. It's the middle class. Independent analysts suggest this would be his most targeted assistance yet to middle-class workers — while trying to repair what he casts as a broken bridge to the middle class.
• Biden’s Student Debt Relief Program Is Excellent, but Student Loans Suck to Begin With (Timothy Noah, New Republic, 8-24-22) Bernie Sanders got this right: We’ll have to make college free, or close to it. Student loans were an invention of the conservative economist Milton Friedman and that they turned out to be a poor substitute for the direct investment in higher education that Friedman succeeded in averting—in large part because the loans never managed to impose the market efficiencies Friedman predicted. The student loan model is unsustainable and the time to shift toward debt-free access to higher education is now, before the whole thing collapses.
• Beware of Scammers Trying to Capitalize on Student Loan Forgiveness (Ann Carrns, NY Times, 9-2-22) The recent action on student debt is fodder for spam callers, who often try to trick borrowers into paying for loan cancellation.
• What About Tackling the Causes of Student Debt? (Kevin Carey, NY Times, 11-18-2020) Pros and cons of loan forgiveness aside, there’s a more fundamental problem.
• How the Biden Administration Can Free Americans from Student Debt (Astra Taylor, New Yorker, 11-23-2020) The books and authors referred to: Debt: The First 5,000 Years by David Graeber and Can't Pay, Won't Pay: The Case for Economic Disobedience and Debt Abolition by Collective Debt
• Who owes all that student debt? And who’d benefit if it were forgiven? (Adam Looney, David Wessel, and Kadija Yilla, Policy2020, Brookings,1-28-2020)
• President-elect Joe Biden says student loan forgiveness does figure in his economic plan: "It should be done immediately." (Tweet, Good Morning America, 11-16-2020) Read the comments.
• Dept. of Education Fail: Teachers Lose Grants, Forced to Repay Thousands in Loans (Cory Turner and Chris Arnold, Morning Edition, National Public Radio, 3-28-18) "Without any notice, [my grant] was suddenly a loan, and interest was already accruing on it," says Maggie Webb, who teaches eighth-grade math in Chelsea, Mass. "So, my $4,000 grant was now costing me $5,000."
Since 2008, the Education Department has offered these so-called TEACH grants to people studying to get a college or master's degree. The deal is, they get to keep the grant money if they spend four years teaching a high-need subject like math or science in schools that serve low-income families.
If they don't keep their end of the bargain, the grants convert to loans that need to be paid back. But, the study finds, many teachers believe they kept their end of the bargain but are now being asked to repay that money anyway.
Some early red flags were raised a few years ago by the Government Accountability Office. The GAO investigated the TEACH grant program and noted that teachers were improperly having their grants taken away. At least 2,252 grants were erroneously converted to loans by the servicer. Part of a special NPR series, The Trouble With TEACH Grants (click on that link to get to the full series).
• Were Your TEACH Grants Converted To Loans While You Were Teaching at a Qualifying School? (Chris Arnold, NPR, 12-9-18)
• Teachers, Lawyers and Others Worry About the Fate of Student Debt Forgiveness (Anya Kamenetz, NPR, 4-5-17)
• Teachers With Student Debt: These Are Their Stories (Elissa Nadworny and Julie Depenbrock, Morning Edition, NPR, 7-26-17) Teachers have one of the lowest-paid professional jobs in the U.S. You need a bachelor's degree, which can be costly — an equation that often means a lot of student loans. Factors that make teaching vulnerable to a ton of debt include chronically low teacher pay, the increasing pressure to get a master's degree, and the many ways to repay loans or apply for loan forgiveness.
• Student Loans: To Solve the Problem, Understand the History (Chad Chubb, Kiplinger, 6-10-19) If you plan on making $60,000 out of college, you should not take on more than $60,000 in loans. If you plan to make $60,000, but your education will cost $180,000, don’t do it!
• Been Down So Long It Looks Like Debt to Me (MH Miller, The Baffler, also a Guardian Long Read: The Inescapable Weight of My $100,000 Student Debt, ) M.H. Miller (the arts editor for The New York Times Style Magazine) left university with with more than $100,000 of debt, for which her father was a cosigner. "In a matter of months, my father had lost everything he had worked most of his adult life to achieve—first his career, then his home, then his dignity....The delicate balancing act my family and I perform in order to make a payment each month has become the organizing principle of our lives...The foundational myth of an entire generation of Americans was the false promise that education was priceless—that its value was above or beyond its cost."
• The Student Debt Problem Is Worse Than We Imagined (Ben Miller, NY Times, 8-25-18) New data reveals how colleges are benefiting from billions in financial aid while students are left with debt they cannot repay. The new data makes clear that the federal government overlooks early warning signs by focusing solely on default rates over the first three years of repayment. That's the time period Congress requires the Department of Education to use when calculating default rates. For-profit institutions have particularly awful results."The secret to avoiding accountability? Colleges are aggressively pushing borrowers to use repayment options known as deferments or forbearances that allow borrowers to stop their payments without going into delinquency or defaulting. Nearly 20 percent of borrowers at schools that had high default rates at year five but not at year three used one of these payment-pausing options."
• Student Loan Debt Can Sink Your Retirement Plan (Harriet Edleson, AARP, 9-18-18) If you've defaulted on a federal student loan, beware: The federal government can take up to 15 percent of your Social Security benefit. ... Most of those whose Social Security money was seized were receiving disability benefits, rather than retirement or survivor benefits, the GAO report said.
• An Administrative Path to Student Debt Cancellation (PDF, report by Luke Herrine, Greater Democracy Initiative, Dec. 2019)
• Is Student Loan Forgiveness Worth It? – Pros & Cons (Sarah Graves, Money Crashers) Followed by links to additional stories.