How US Colleges Became Corporations (Second Thought)

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

How to Select the Best College Using the College Scorecard (FSA Outreach and Glen McGhee)

The Higher Education Inquirer appreciates your comments on this 2023 video produced by the US Department of Education, Federal Student Aid titled "Financial Aid Bootcamp: How to Select the Best College Using the College Scorecard."

While the College Scorecard provides valuable information, it's important for users to understand its limitations and consider multiple sources when making decisions about higher education. The tool continues to evolve, with ongoing efforts to enhance its accuracy and comprehensiveness. 

If there are other videos that you think would help consumers make better college and career choices, please let us know.