Posts with the tag student loans

50 Groups Urge Senate to Invest in Education, Reform Student Loans

pdelatorre — Tue, 10 Nov 2009 14:28:25 EST

Today, a diverse coalition of 49 groups representing millions of Americans submitted the following letter to the Senate HELP Committee expressing its support for the Student Aid and Fiscal Responsibility Act. The House passed the bill in late September, and it is expected that HELP Committee Chairman Sen. Tom Harkin will introduce his version of the bill in the coming weeks. The coalition was convened by Campus Progress, the United States Public Interest Research Group (USPIRG), the United States Student Association (USSA), and the Campaign for College Affordability.

The cooperation of these organizations, which include student groups, women’s groups, parent groups, African Americans, Latinos, college admissions officers and registrars, social workers and others, sends the clear message that this legislation is critical for the advancement of educational opportunity in America, and will finally prioritize the needs of students over those of banks and special interests.

Check out the letter below, then take action:

Want to do some Pell Raising on Your Campus?

pdelatorre — Fri, 25 Sep 2009 14:51:27 EDT

Campus Progress is working with partners like the US Students Association and the PIRGs to mobilize students across the country for the Raising Pell Week of Action, October 6th – 8th.

Students are taking action to ensure that their Senators support President Obama’s plan to stop funding government subsidies to banks, and instead increase the Federal Pell Grant.

Take a stand and organize an event on your campus. If you are interested in participating in the week of action to your campus, fill out our event request form, or contact us atorganize@campusprogress.org.

To learn more about the issue, visit Students Over Banks.

College Affordability Gets an “F”

pdelatorre — Wed, 03 Dec 2008 18:20:55 EST

Campus Progress Statement on the National Report Card on Higher Education

Washington, DC -- December 3, 2008 -- America has flunked on college affordability! That is the message sent by a report released earlier today by The National Center for Public Policy and Higher Education that grades states’ higher education systems by their affordability, participation, preparation, and completion. Every state in the US except California received an “F” when it came to college affordability. On average, college costs low and middle income families 25% to 55% of their family income after financial aid is considered.

This shocking reminder of America’s failure to invest in the next generation should spur students, families, colleges and policymakers into action. With the national dialogue focused almost exclusively on short-term measures to bailout certain sectors of our economy, Campus Progress believes that a strong case should be made for a significant, long-term investment in college access and affordability. An educated workforce is the backbone to any viable vision of working economy, but without a renewed commitment to college affordability America will continue to fall behind in the global market.

UPDATE: Who are we bailing out? Banks or Students?

pdelatorre — Tue, 02 Dec 2008 16:11:46 EST

Bad news – despite letters from concerned taxpayers, students, and college affordability advocates, Treasury Secretary Henry Paulson announced that he will be moving ahead with his proposal to spend part of the $700 billion dollar bailout to “save” providers of private student loans.

Campus Progress, along with the Project on Student Debt and many others, urged Secretary Paulson against this action, and asked the public to express their concern. We feel that this action is unnecessary, counter productive, and unfair. We should not spend taxpayer dollars to help CEO’s while students are denied the right to discharge their education loans in bankruptcy if they run into financial hardships.

Don’t throw up your arms and walk away - we need to demand that any government bailout for lenders making risky, high-cost loans is accompanied by common sense protections for borrowers.

Write to Secretary Paulson urging him not to sell out students while bailing out lenders.

Take Action for Fair Loan Payments!

pdelatorre — Tue, 15 Jul 2008 13:29:00 EDT

The Department of Education recently proposed policies that detail how it will implement the new Income Based Repayment (IBR) and Public Service Loan Forgiveness Programs created through the College Cost Reduction and Access Act last year. These programs will limit monthly payments to manageable percentage of a borrower’s income, and forgive student loans for borrowers who choose a career in public service (click here to learn more).

While most of what the Department of Education has proposed is good, the proposed policies include two unnecessary and costly obstacles for borrowers. Borrowers interested in Public Service Loan Forgiveness would be left in the dark for years on whether their jobs count as eligible public service, and in IBR, some married borrowers would have to pay twice as much on their monthly payments.

Let ED know that they should remove these obstacles – take action now!

Dont forget to check out our Action Alerts Page to make your voice heard on other issues that matter!

Savings on Federal College Loans for Millions of Students, Starting Today

ChairmanGeorgeMiller — Tue, 01 Jul 2008 14:04:11 EDT

Starting today, July 1, interest rates on need-based federal student loans will drop, making these loans cheaper for millions of college students. With our economy putting enormous financial strains on Americans and tuition prices continuing to soar, these new financial aid benefits could not be coming at a more critical time for college students. As families continue to explore their financial aid options for the coming school year, it is crucial to make sure that students are fully aware that significant financial relief, whether in the form of cheaper student loans, increased grant aid, or up-front tuition assistance, is available to help them pay for college this fall.

Lenders Are Avoiding Giving Loans to Low-Income Students

Ben Miller — Mon, 02 Jun 2008 23:15:49 EDT

There’s an interesting story in the New York Times today about how some student loan companies have stopped offering loans to some students at community colleges and “other less competitive institutions.”

At face value, the move appears to be an ongoing reaction to the effects of the credit crunch on the student loan market, a topic both Kay and Pedro have written about. Essentially, a worldwide lack of people and institutions willing to lend money raised the cost of borrowing for loan companies to the point where the guaranteed return they received from the government was insufficient for the loans to be profitable. As a result, some lenders have stopped offering federally-guaranteed student loans, in which the government pays up to 97 percent of the value of a defaulted loan and gives the lenders a quarterly subsidy known as a special allowance payment.

Given that loans already appear to be turning smaller profits, the decision to stop lending to schools where students are more likely to default on their debt makes sense from a pure capitalistic standpoint.

But the federal student loan market is far from a free market enterprise. As mentioned above, lenders are given governmental subsidies to make the loan and stand to lose no more than 3 percent of the loan. In addition, under a plan unveiled by the Department of Education on May 21, lenders will now also be able to receive a low-interest government loan to help stay in the market.

So what are lenders doing with this governmentally-subsidized money? Not putting it toward the neediest students who are most likely to require financial assistance in going to college, and also the most likely to drop out if faced with too many hurdles.

The fact that companies can take government money and then essentially redline low-income students suggests that perhaps an incentive should be introduced that lenders hoping to take advantage of these funds cannot dramatically adjust the schools they are willing to serve.

While what the loan companies are doing may appear immoral, it is not illegal. It does, however, both expose a major flaw in the federally guaranteed student loan market and raise questions about the actions and motivations of the schools that are getting passed over.

First, let’s consider the school’s motivation. If there are concerns about finding lenders to offer loans, why don’t these institutions take the obvious step of at least applying to join the Direct Loan program? Direct Loans are dispersed by the Department of Education using U.S. Treasury funds. Because the money comes straight from the government, any school in the program will always be able to get loans so long as it continues to meet eligibility requirements. The article doesn’t address whether these schools are considering switching, but it certainly seems that if colleges really have their charges’ best interest in mind they would at least entertain the idea.

Finally, the decision by loan companies to be more selective institutionally exposes an inherent flaw in the federally guaranteed student loan market: the loans are an entitlement for students, but no lender is required to make them. Congress sets the subsidy rate for lenders and hopes it’s sufficient to get companies to make loans. But as the Times article shows, what could be enough for loans at one type of school may not work elsewhere. Creating a system where companies bid with one another for the lowest subsidy at which they will make loans to all students in a given state or region would at least ensure that certain schools couldn’t get bypassed.

Something for Nothing: More on the Pseudo-Student-Loan Crisis

pdelatorre — Mon, 19 May 2008 11:52:17 EDT

As you have probably heard by now, the “credit crunch” has been making the student loan market less lucrative for many lenders, and has caused a bit of a controversy in the world of higher education.

To recap – lenders are trying to argue that problems in the credit markets will lead to a crisis for students who need loans to attend school, while most others think that the affects for most students will be small. Congress and the Education Department have created new policies to make sure that, no matter what happens, students will be able to access financial aid, but lenders, who already receive government subsidies to make loans to students, keep pushing to get a sweeter deal for their bottom line (as opposed to sweeter deals for students or taxpayers).

I thought this new article in the Chronicle of Higher Education might help point to the difference between planning for the worst (good), and unnecessarily wasting taxpayer money (not so good):

Student Loan Providers Want More Easy Money

pdelatorre — Wed, 14 May 2008 11:27:11 EDT

The Quick and the Ed has a good post today taking apart a letter to the editor where Kevin Bruns, the executive director of America’s Student Loan Providers, pouts about a recent Washington Post editorial about direct loans.

Student Loans Drying Up In MN

Kay Steiger — Mon, 14 Apr 2008 16:31:09 EDT

An article in the Minneapolis Star Tribune last week looked at how students in Minnesota might be affected now that student loans are starting to dry up. The article reports that the average student that attends college in Minnesota college carries a debt load of $23,375 -- that's higher than the national average.

The article says not to worry, however:

"There may be fewer lenders, but I'm not in a panic," said Jane Williams, director of financial aid at Concordia. "We still think there are plenty of loans out there. I don't think it's necessary for families to be worried."

Oh good. There are still plenty of lenders out there.

Credit Crunch and Student Loans

pdelatorre — Thu, 10 Apr 2008 13:59:08 EDT

As you have probably heard, we are going through some rocky financial times. A “credit-crunch” fueled recession means that many financial institutions will have a harder time making ends meet, and this, of course, includes student loan companies, as the Washington Post points out today.

Higher education advocates are worried that these lenders are exaggerating the effects of the crisis on the student loan industry as a way to secure unneeded bailouts and get back some of the wasteful subsidies that Congress cut last year in order to increase student aid. They are also worried that all of the hype will mean debt-averse students may be discouraged from “investing” in a college education. Don’t worry – it is very unlikely that you won’t be able to get the loans you need to finance you education.

Congress, the Economy, and Student Loans

Ben Miller — Tue, 18 Mar 2008 22:58:15 EDT

There has been a lot of speculation recently about how the slowing economy could harm access to student loans. A few lenders have announced that they will stop offering, or originating, new loans — moves that have prompted hearings by both the House and the Senate. Given this uncertainty (and some overly alarmist stories by respected news outlets) its worth saying a few words about what really is, and is not, at risk in the student loan “crisis.”

What’s at Stake?

What is not at risk is federal student loans. The decision by the Pennsylvania Higher Education Assistance Authority, a large lender, to stop offering federal loans received numerous press hits, but it obscures the fact that there are over 2,000 other private lenders still offering loans. Even if large numbers of lenders went under, students would still have two viable options for loans: loans of last resort and the direct loan program

The lender of last resort program is a rarely invoked provisionthat guarantees students will receive loans through a guaranty agency, a middle-man that reinsurances loans for the government, if their loan application has been denied twice. The Direct loan program, meanwhile, involves the U.S. Treasury providing loan funds through the Department of Education. This is in contrast to the Federal Family Education Loan Program (FFELP), in which students get funding through private companies such as Sallie Mae. (Click here for more on the difference between the two programs). Regardless of how students get the loan, their borrower benefits remain exactly the same.

So what is at risk? The answer so far appears to be students trying to take out private loans at some for-profit schools. A lot of these are subprime loans given to students at questionable institutions that put a greater emphasis on enrollment figures than teaching quality. This represents an estimated 2 to 3 percent of all borrowers — many of whom are likely to fall in the 50 percent of borrowers who turn to private loans before exhausting the up to $46,000 that students can annually take out in federal loans.

A number of prominent individuals, such as Secretary of Education Margaret Spellings, Sen. Edward Kennedy (D-MA) and Rep. George Miller (D-CA), have echoed this argument in letters to college presidents.

Congressional Action

Then there are the Congressional hearings. Kennedy held his own in Boston on Monday, but it wasn’t available online or on TV. Miller, the chairman of the House Education Committee, also held his own hearing last Friday, but this revealed less about the state of student loans and more about how partisan any issue can become. Despite his previous calm, Miller used the hearing as a chance to badger Spellings and other members of the department about their preparedness for enacting lender of last resort provisions or expanding the direct loan program. This came across more as a chance to skewer a political opponent, rather than genuine concern.

The Republicans on the House Education Committee weren’t much better. Howard “Buck McKeon” (R-CA) mostly ignored the issue of availability after his initial statement, turning the focus instead to a fight over direct vs. FFELP loans (Republicans oppose direct loans, seeing the program as an unnecessary expansion of government).

The Big Picture

During all the bluster on student loan availability, there has been one major issue noticeably absent: the cost of college. Students would never need such large loans had the cost of college not increased at such an astronomical rates over the past few decades. It doesn’t help that many states (and the government) have announced plans to slash some higher education funding for the coming year — decisions that will undoubtedly lead to larger tuition bills. Given that federal loans continue to be widely available, perhaps Congress would be better served to stop obsessing over a “crisis” and take action that would reduce the need for loans in the first place.

Higher Education Act Reauthorization Passes House

pdelatorre — Thu, 07 Feb 2008 18:27:42 EST

The Center for American Progress and Campus Progress are pleased with today’s passage by the House of Representatives of the College Opportunity and Affordability Act (H.R. 4137). This legislation continues to build on Congress’s commitment to making college more affordable and ensuring that Americans are prepared to compete in an increasingly knowledge-based economy.

Bankruptcy & Private Student Loans

pdelatorre — Tue, 05 Feb 2008 14:03:53 EST

An amendment has been introduced that would give important protections to private student loan borrowers.

Since student loan companies lobbied their way into the Bankruptcy Bill in 2005, borrowers have been virtually unable to discharge private student loans through bankruptcy. Instead of treating these loans like credit cards or any other form of consumer debt, they are treated more like a criminal fine. This leaves borrowers few ways to deal with what are often high-cost loans if they run into financial troubles.

Later this week, the House of Representatives is taking up its version of the reauthorization of the Higher Education Act - the law that governs almost every federal program and policy towards higher education. We have a chance, if we act fast, to change this situation. Rep. Danny Davis proposed an amendment that would extend bankruptcy protections to private loan borrowers.

Please urge your representative to support the Davis Amendment

Crushing the monopoly of bookstores, one free book at a time

singhm — Thu, 17 Jan 2008 16:07:07 EST

So there's a site that actually allows students to download their textbooks, and print them out, for free (I guess you pay the cost of printing). Wish I would've had this in undergrad. I loathed my undergrad bookstores for paying me 50 cents for buying back books I paid over $150 for (until I discovered the joy of selling books online).

I especially like their slogan: Liberating textbooks and study aids for students of all financial backgrounds.

The price of books, when compared with the rising costs of tuition (as CP's college affordability campaign can tell you more about), could be considered small, but when you're paying that $600/semester on books out of your student loans, every penny helps.

Debt hits slightly less hard -- but more to do

halperindavid — Wed, 19 Sep 2007 18:44:27 EDT

Speaker Pelosi held an event at the Capitol yesterday to sign and send to the President very important legislation to make college more affordable. Here's an excellent quality cell phone shot of the Speaker, Senator Ted Kennedy, Rep. George Miller, Rep. Joe Courtney, and others -- all leaders in this effort to stop the shameful government handout to lenders and use the money to help students afford college. There’s also video of the event.

None of this would gave happened without the efforts of young people, through Campus Progress's Debt Hits Hard Campaign, through our Campaign for College Affordability coalition, and other efforts, to demand change. The efforts of New York State Attorney General Andrew Cuomo, a number of journalists, our own Pedro de la Torre, and others to investigate and expose bad practices and shady dealings between lenders and financial aid offices were also critical.

The work is by no means done. College is still out of reach for far too many young people. One area that needs reform now is private loans, the ones not guaranteed by the government. Lenders need to present clearer information to students about loan terms – and about the fact that students are better off obtaining all the federally guaranteed loans they can before seeking private loans.

Right now you can weigh in on this debate, expose more bad behavior, good behavior, or other key facts about financial aid and the loan industry, get your work noticed, and potentially win $2500 to pay tuition or pay off student loans. It’s our College Affordability Essay Contest – deadline October 29. Enter now!

Banks Continue to rip off Students, Government

Michael Kmet — Mon, 17 Sep 2007 12:44:53 EDT

There’s a must read article posted on Saturday by Michael Kinsley at Slate that takes a fascinating (and depressing) look at corruption in the student loan industry. The federal student loan program, which has been “stricken by scandal in the recent months,” guarantees loans to students and pays off the interest to banks. The problem is that the government is paying twice the interest on these loans compared to ones it guarantees for itself to pay off the national debt. And it's a big problem--the subsidy costs taxpayers four billion dollars a year. And who’s at the source of the problem?

Not those head-in-the-clouds Democrats. It's Republicans, who adopted the student loan "industry" in its infancy, like a stray cat, and have nurtured it and protected it ever since. There actually is a parallel student loan program that does use government funds. It was started in the early days of the Clinton administration. It costs less to operate, and it has not been tainted by scandal. But when the Republicans regained control of Congress in 1994, they pushed through a law forbidding the Education Department to encourage the use of this program. As a result, direct federal loans account for only 25 percent of all student loans.

Useful Tool

Kay Steiger — Fri, 14 Sep 2007 14:23:33 EDT

If you're looking for hard data on your college or university in relation to class, race, and student loans, check out this tool, which allows you to look at the numbers for your institution.

Giving Students Guidance

Kay Steiger — Thu, 23 Aug 2007 10:54:51 EDT

Lindsey Luebchow* points out that one college, profiled in Inside Higher Ed recently, proved that one-on-one counciling can help reduce student debt, and it's actually possible to pull it off:

As the Barnard [College] example shows, proactive counseling can go a long way in preventing students from making bad decisions that will haunt them well after they leave college. But are similiar efforts feasible at larger universities with enrollments that exceed Barnard's 2,400 students?
The answer is "yes"—at least at Colorado State University, which enrolls more than 20,000 undergraduates and about 4,000 additional graduate students. For more than a decade, financial aid administrators at the university, which participates in the federal Direct Loan program, have been concerned about students unnecessarily taking out non-federally guaranteed, private loans. And they have been doing something about it.
As a school that is about 10 times as large as Barnard, Colorado State officials realized that they didn't have the capacity to contact each and every borrower who applied for a private student loan. Instead, they decided that they would target private loan applicants who have not exhausted their federal loan eligibility. When private loan applications come in, the financial aid office flags students who either have not filled out a FAFSA or already have federal loans but still have eligibility remaining.

*I accidentally originally credited this post to Sara Mead.

More Expensive Private Loans More Popular

Kay Steiger — Wed, 22 Aug 2007 12:58:03 EDT

Via the Chronicle. It appears that in the latest development on student loans that students are more likely to sign on with devastatingly higher loan rates with private firms rather than fill out the (roughly) 20-page long federal aid form which offers lower rates. This is unsurprising to me. I remember filling out that form. It was painful, to say the least, and when private firms are offering forms where more or less all you have to provide is your social security number and your parents' address.