SAVE borrowers get 6 month pause—maybe you can too. (Debt Collective)

 

The US Department of Education just announced that everyone enrolled in the SAVE plan will have their student loans paused in a zero-interest forbearance for at least six months as the extreme right wing assault on student debt relief plays out in the courts.

The SAVE application is back online. If you are not currently enrolled in SAVE—and want to keep your payments paused—you may want to consider applying for Income-Driven Repayment and choosing the SAVE plan: https://studentaid.gov/idr/

The SAVE plan is by no means a solution to the student debt crisis—and we have many critiques for it as a plan. But for debtors desperate to avoid payments for even just the next few months, applying for SAVE to have your payments paused might be an option that works for you.

NOTE: Months spent in zero-interest SAVE forbearance are not being counted towards PSLF or IDR.

Sign our petition to pause all student loans and have the pause count towards PSLF/IDR.

 

ADD YOUR NAME HERE

 

If you are a few months away from getting full cancellation through PSLF, it might be in your best interest to enroll in a different payment plan and make those few monthly payments until you get full cancellation. You can also explore the complicated “buy back” program. More information on both here.

Sweet v Cardona Borrower Defense Update

The most recent update to the Sweet v Cardona Borrower Defense to Repayment case is here.  This video was taped September 26, 2024.  A transcript of the meeting is also available. 

According to Rebecca Ellis of the Project on Predatory Student Lending, "we think that this is substantial compliance in our eyes with the August 31st deadline. It's a very small number of loans still outstanding that have these particular complications."  About 870 loans from the automatic relief group are still awaiting discharge. However, several thousand refunds are still awaiting processing from the US government and student loan servicers. 

Student loan debtors have a community on Reddit at r/BorrowerDefense where more than 12,000 members exchange information and provide support. 

Student Loans in the US: A Trillion Dollar Tragedy (Glen McGhee)

Adam Looney and Constantine Yannelis have reopened their research on the student loan mess with a new paper from Brookings titled "What went wrong with federal student loans?" The paper talks about what went tragically wrong with student loans in the United States from 2000 to 2020. 

Here are the key points:

1. More people started going to college, especially those who didn't have a lot of money or whose parents didn't go to college. [See note below]
2. To pay for college, many of these new students had to borrow money from the government through student loans.
3. A lot of these new students went to for-profit schools. These are schools that are run like businesses to make money, unlike regular public or non-profit colleges.
4. The problem is that many of these for-profit schools didn't provide a good education. Their students often didn't graduate or couldn't find good jobs after finishing school.
5. Because these students couldn't get good jobs, they had trouble paying back their loans. This caused a big problem for the government and the students.




Now, let's look at Figure 3 Panel B:
This graph shows how many first-generation college students (students whose parents didn't go to college) enrolled in different types of schools. The schools are grouped by how well their students could repay loans. The red line at the bottom represents the best schools - where students usually paid back their loans easily. You can see this line barely goes up over time. The dark blue line at the top represents the worst schools - where students had the most trouble paying back loans. This line goes way up, especially after 2000.

What this means is that a lot of first-generation students, who often didn't have much money to begin with, ended up at the schools where they were least likely to succeed and most likely to have trouble with their loans.

The for-profit schools took advantage of this situation. They aggressively recruited these students, knowing they could get money from government loans. But they didn't focus on giving students a good education or helping them get jobs. Instead, they just wanted to make money for themselves.

This led to a big increase in student debt problems, especially for students who were already at a disadvantage.

Note: This statement refers to trends in college enrollment that occurred in the early 2000s through about 2012. Let me explain the reasons behind this trend and whether it's still true today:

Reasons for Increased College Enrollment
1. Policy Changes: Starting in the late 1990s, policymakers weakened regulations that had previously constrained institutions from enrolling aid-dependent students[1]. This made it easier for more people to access federal student aid and enroll in college.
2. Economic Factors:
- The persistently high return to college education over the last several decades increased demand for higher education[1].
- During economic downturns like the 2001 recession and the Great Recession starting in 2007, the opportunity cost of enrollment was low due to weak labor markets[1].
3. Supply Expansion: The supply of programs surged, particularly open access institutions, online programs, and graduate programs[1]. Many of these new programs were targeted at non-traditional student populations.
4. Demographic Shifts: Between 1990 and 2010, the number of high school graduates increased by 34%[1].

Is it Still True?
The trend of increased college enrollment, especially among disadvantaged groups, has partially reversed since its peak:
1. Overall Enrollment: By 2020, total undergraduate enrollment had declined back to near its level in 2000[1].
2. Demographic Changes:
- Black undergraduate enrollment in 2020 remains only modestly higher than in 2000 - about 10% greater[1].
- White undergraduate enrollment in 2020 was below its level in 2000[1].
- Hispanic enrollment almost doubled between 2000 and 2020[1].
3. First-Generation Students: While 60% of postsecondary students were first-generation in 2000, this share declined to 56% in 2020[1].
4. For-Profit Sector: Enrollment at for-profit institutions, which had surged between 2000 and 2012, has since declined significantly[1].

In summary, while there was a significant increase in college enrollment, especially among disadvantaged groups, from 2000 to 2012, this trend has partially reversed in recent years. However, some changes, like increased Hispanic enrollment, have persisted. The overall landscape of higher education enrollment continues to evolve, influenced by economic conditions, policy changes, and demographic shifts.

Citations:
[1] https://ppl-ai-file-upload.s3.amazonaws.com/web/direct-files/238393/f60f1373-2266-45ed-8960-6656ba110b38/paste.txt
[2] https://www.brookings.edu/articles/first-generation-college-students-face-unique-challenges/
[3] https://www.capturehighered.com/client-blog/landscape-in-flux-2024-enrollment-trends/
[4] https://medicat.com/why-first-gen-college-students-need-extra-support/
[5] https://www.insidehighered.com/news/2019/05/23/pew-study-finds-more-poor-students-attending-college
[6] https://www.forbes.com/advisor/education/online-colleges/first-generation-college-students-by-state/
[7] https://nces.ed.gov/programs/coe/indicator/cpb/college-enrollment-rate

Pending HEI Investigations

The Higher Education Inquirer (HEI) is working on a number of investigative projects. They include:

(1) Maximus is the sole contractor for the US Department of Education's Default Resolution Group (DRG) and its "Fresh Start" program.  The DRG contract is set to expire, and information about their contract appears to have been removed from public view. DRG is likely to face more problems as defaults are expected to rise dramatically in late 2024. 

(2) Subprime scholarship at America's largest online robocolleges, including Liberty University's online doctoral degrees in history and philosophy. We are communicating with subject matter experts to determine the extent of the problem. 

(3) Our 6 1/2 year battle to obtain information about bad actors receiving Department of Defense Tuition Assistance (TA).  

Approximately $600 million in tuition assistance each year is managed by DOD VOL ED and its contractors. About 100,000 servicemembers each year use TA benefits to pay for continuing education, and a disproportionate amount goes to robocolleges.

In 2017, as a continuation of Obama-era policies, contractors PwC and Gatehouse compiled a list of the 50 worst offenders, schools that were violating DOD MOU and President Obama's Principles of Excellence (Executive Order 13607). 

Under President Trump, DOD refused to name the bad actors and did not punish anyone for their violations.  In 2018, DOD education program analyst Anthony Clarke said that DOD did not want to create a "witch hunt." After 2019, the oversight program fell under the radar.  

The University of Phoenix was implicated in a number of violations, but there is no record that DOD did anything to correct the situation, other than to reprimand at least one base commander. DOD has had a long-term relationship with predatory subprime colleges for years through the Council of College and Military Educators (CCME). 

DOD has a current contract with Purdue University Global offering degrees of questionable academic value. 

HEI has spent a great effort communicating with DOD officials, whistleblowers, and political aides, and following up with information that first appeared in in the Military Times in 2018 and 2019, then reappeared in 2024. We are also awaiting a substantive response from DOD FOIA 22-1203-F submitted in July 2022 that has received multiple delays and is not expected to be answered until October 4, 2024, about 1 month before the US federal elections.     

Related links:

Maximus, Student Loan Debt, and the Poverty Industrial Complex 

Articles About Robocolleges 

Articles About DOD Tuition Assistance