Student Loan Blog : student loan debt, federal student loans

Groups Say Forgiving Student Loan Debt Would Boost Economy

Student Loan Girl — Thu, 26 Mar 2009 00:16:00 GMT

As student loan debt continues to rise — jumping to $20,098 per graduating student loan borrower in 2007 from $18,796 in 2006 — and employment prospects continue to worsen, college graduates are experiencing greater difficulty repaying their student loans, and some of them have said enough is enough, BusinessWeek reports ("Asking for Student Loan Forgiveness,” March 24, 2009).

In 2008, borrowers fell behind on nearly $131 billion in private student loan payments, according to FinAid.org. There were $544 billion in federal student loans left outstanding for the fiscal year 2009, up from $502 billion in 2008, the U.S. Department of Education reports.

Student Borrowers Use Facebook to Advocate A Break From Loans

While Robert Applebaum hasn’t fallen behind on his student loan payments from law school, he has become frustrated with his mounting student loan debt. The New York attorney saw his $80,000 student loan debt balloon to $100,000 after he put his loans into forbearance for five years when he was working a low-paying job at the Brooklyn District Attorney’s Office.

Fed up with his rising debt and with recent media reports of banking executives from bailed-out banks receiving hefty bonuses or spending taxpayer money on million-dollar office renovations, Applebaum took his gripes online. He used Facebook as a soapbox to promote his own idea for stimulating the economy: canceling student loan debt. He quickly found out he wasn’t the only one interested in this idea.

Within the first two weeks of starting the Facebook group “Cancel Student Loan Debt to Stimulate the Economy,” Applebaum gained 2,500 followers. Just two months later, the group now has more than 138,500 members.

“Despite having a law degree, I’m middle class and I don’t have any money at all,” Applebaum says. “I don’t own a house or a car. My only assets are my couch and television.”

More Change Needed But Reforms Are Taking Shape

Applebaum hasn’t been the only one to take to the Internet to advocate for student loan forgiveness. Alan Collinge, founder of the website StudentLoanJustice.org, has used his site as well as in-person visits with elected officials throughout the country to increase awareness about the problems in the student loan system. Collinge has advocated for a return of what he calls “basic consumer rights” to student loan borrowers. Currently, student loans are one of a few types of consumer debts that are almost impossible to discharge in bankruptcy proceedings.

“Until someone shows me why student loans should specifically be exempt from bankruptcy protections, it’s definitely a fight worth fighting,” Collinge said.

Although it may be some time before the government agrees to forgive student loan debt, legislators have taken steps to make student loan payments more affordable.

On July 1 of this year, the government will implement the Income-Based Repayment plan, which caps borrowers’ monthly student loan payments at 10 percent of their gross income for 25 years, after which borrowers’ remaining debt will be forgiven. And the government’s Public Service Loan Forgiveness program allows borrowers to make income-based repayments on their student loans and have those loans discharged after 10 years of working in public service.

NextStudent, college, college loans, student loans, student loan forgiveness, discharge student loans, student loan debt, college graduates, graduate debt, BusinessWeek, Facebook groups, private student loanns, federal student loans, Finaid.org, U.S. Department of Education, Educaiton Department, Robert Applebaum, Brooklyn District Attorney's Office, cancel student loan debt, canceling student loan debt. Alan Colinge, student loan justice, student loan system, student loan borrowers, bankrupcty debt discharges, affordable student loan payments, student loan legislation, income based repayment plans, public services loan forgiveness

Share this post: email this | del.icio.us | reddit

Davidson College Sees Positive Results After Eliminating Student Loans

Student Loan Girl — Thu, 10 Jul 2008 03:44:00 GMT

While Princeton was the first university to completely eliminate student loans from its financial aid packages in 2001, it was Harvard’s announcement to follow in Princeton’s footsteps this fall that garnered national media attention as no-loan financial aid policies for 2008–09 began to turn up at elite colleges and universities across the country: Amherst, Columbia, Dartmouth, Stanford, Swarthmore, Yale.

So far, some 50 institutions across the country have implemented no-loan and loan-cap financial aid policies, according to the Project on Student Debt, a nonprofit advocacy group — in some cases for all students; in others, only for students whose families fall below a certain income cutoff, although that cutoff runs as high as $150,000 a year at some schools.

After stinging rebukes from legislators critical of yearly tuition-hikes that have outstripped inflation and the proliferation of costly private student loans in undergraduate debt loads, many of the nation’s richest schools have moved to reduce student dependency on college loans and to entice greater numbers of low- and middle-income students to enroll at their institutions.

But it’s a small, selective liberal arts institution in North Carolina — Davidson College — that’s already seeing the results of eliminating student loans from its financial aid packages (“At Davidson, Getting Rid of Loans Shows Early Signs of Success,” The Chronicle of Higher Education, July 11, 2008).

While the long-term, broader nationwide impact of these new financial aid policies may not be seen for a few years, Davidson — which got a head start over the rest of the Ivy Leagues by instituting its no-loan policy a year earlier, in the fall of 2007 — has already experienced a three-percent jump this year in the number of incoming students who demonstrate financial need.

Although Davidson’s endowment of $489 million is much smaller than the multibillion-dollar endowments of its Ivy League competitors, the school has set a goal to have 40 percent of its incoming students receiving only need-based aid by 2011 — a plan that Davidson’s dean of admissions and financial aid, Christopher Gruber, says will cost $3.5 million to implement.

"We're moving in the right direction with a year to promote it," Gruber says.

Davidson’s early results aren’t surprising, says Jonathan Epstein, from the education consulting firm Maguire Associates. But families shouldn’t expect no-loan policies to become the norm. “My take is, it’s not something that, as announced policy, is going to spread across the country.”

Share this post: email this | del.icio.us | reddit

Community Colleges Want to Control How Much Certain Students Can Borrow in Student Loans

Student Loan Girl — Fri, 20 Jun 2008 23:54:00 GMT

Concerned that some students at two-year schools may borrow more in federal student loans than they can afford to repay, community college officials want the federal government to give community colleges control over how much their students can borrow in federal aid.

Community colleges want the authority to deny some of their own students the right to take out federally subsidized loans, because the schools believe that some students may not earn enough after graduation to repay their student loan debt, according to an article in The Chronicle of Higher Education (“Community Colleges Want Their Authority, Not Banks,’ Over Student Borrowing,” June 18, 2008).

The change is needed because colleges currently have no way of preventing a student from taking out a college loan that doesn’t make economic sense given the student’s long-term job prospects, says David Baime, vice president of government relations for the American Association of Community Colleges.

The association, which represents more than 1,200 institutions nationwide, is pushing for legislation that would give community colleges the right to control how much their students can borrow, rather than being at the mercy of private lenders who can stop lending to certain schools at any time. The AACC is lobbying for this authority after a recent move by some of the nation’s biggest banks to stop offering student loans to certain community colleges and other two-year institutions.

The banks’ decision to cease lending to these schools also prompted Democratic Senators Patty Murray and Christopher Dodd to introduce legislation that would prohibit lenders from ‘cherry-picking’ which schools they do business with.

Share this post: email this | del.icio.us | reddit

Tufts University to Help Graduates in Public-Service Repay Student Loans

Student Loan Girl — Thu, 24 Apr 2008 17:31:00 GMT

Under a new student loan repayment program offered by Tufts University, graduates and undergraduates from the school who pursue jobs in public service could have a portion of their student loans forgiven.

Tufts alumni from any graduating class who choose or have chosen to work for a nonprofit or public-sector employer following graduation may be eligible for the program, according to an article by The Chronicle of Higher Education writer Elizabeth Farrell (“Tufts Offers Loan Relief to Public-Service-Minded Students and Alumni,” April 23, 2008).

Tufts officials tout the university-wide program as the nation’s first debt relief plan to include all students who graduate from a particular school, Farrell wrote.

The total loan-repayment-assistance award a Tufts graduate could receive through the program is dependent on the graduate’s income level and the remaining balance of his or her student loan debt.

University officials expect to grant the school’s first loan-forgiveness awards in December. Initial funding for the program includes a $100 million gift from Tufts graduate, and eBay founder, Pierre Omidyar and $500,000 from the Omidyar-Tufts Microfinance Fund.

Share this post: email this | del.icio.us | reddit