Free Republic

Nearly all American institutions of higher education raise money they put into endowments—money that is kept invested in securities. At the same time, many of their students borrow money from the federal government so they can afford to attend. As I will explain, this system is fraught with problems. It would be far better if colleges and universities would raise money to lend to students who need it to attend. I see several reasons why they should do so. First and foremost, lending to students gives schools “skin in the game.” Warren Buffett’s billions stand testament to the wisdom of...

WASHINGTON—The White House is weighing a measure that would require colleges and universities to take a financial stake in their students’ ability to repay government loans, an effort that could squeeze loan availability to students and reduce defaults. For several months, Trump administration officials have been discussing enacting such a mechanism or making a push for one in Congress as part of a broader effort to combat rising college costs. In the administration’s budget proposal released Monday, officials made brief mention of a “request to create an educational finance system that requires postsecondary institutions that accept taxpayer funds to have...

WASHINGTON—The White House is calling on Congress to cap how much graduate students and parents of undergraduates can borrow in federal student loans, a proposal it said is aimed at curbing rising college costs. White House officials publicized the proposal as part of a broader set of ideas it is urging Congress to adopt as lawmakers undertake a rewrite of the Higher Education Act, a 1965 law that governs student loans. The law hasn’t been reauthorized since 2008, and Democrats and Republicans agree it is due for an overhaul given the growth of online and other nontraditional degree programs. The...

SAN ANTONIO — Student loans. The thought alone can spark a headache, but some students at UTSA are finding relief with the help of so-called "sugar daddies." The students have been coined "sugar babies," and the operators of the dating website Seeking Arrangement said UTSA is among the top colleges of what they call "Sugar Baby Schools." They said local college students are turning to sugar daddies to pay student loans, a financial dilemma UTSA students we spoke with can relate to. Anthony Silvas calls himself a super senior. He said over the last five years, he’s borrowed about $15,000...

Borrowers could soon be required to pay back their federal student loans directly from their paychecks, if one powerful Republican gets his way. Senator Lamar Alexander, a Republican from Tennessee and the chair of the Senate’s Committee on Health, Education Labor and Pensions, which oversees higher education, proposed automatically withholding a borrower’s monthly student-loan payment from their paycheck, similar to the system already used for federal payroll taxes. (snip) ...Proponents of payroll withholding for student-loan payments say the idea would help borrowers stay current on their loans and avoid default, while also ensuring taxpayers received a return on their investment,...

Parent PLUS is not typically the loan program making headlines when student loans are in the news. But over the past several years, it has become a central part of America’s higher-education financing system. Under Parent PLUS, parents can borrow freely—with no limit—from the federal government to support their children’s education. Government programs without significant guardrails rarely turn out well, and Parent PLUS is no exception. New research from Adam Looney and Vivien Lee of the Brookings Institution illustrates just how out-of-control the parental loan program has grown. In 2014, the average parent borrower held $38,812 in Parent PLUS debt...

Abstract We study the link between the student credit expansion of the past 15 years and the contemporaneous rise in college tuition. To disentangle simultaneity issues, we analyze the effects of increases in federal student loan caps using detailed student-level financial data. We find a pass-through effect on tuition of changes in subsidized loan maximums of about 60 cents on the dollar and of about 20 cents on the dollar for unsubsidized federal loans. The effect is most pronounced for more expensive degrees and degrees offered by for-profit and 2-year institutions.

I am curious about the growing conversation over the repayment or forgiveness of the $1.3 TRILLION (and growing) student loan debt. Like everyone I knew who didn't have full scholarship, I worked my way through college and I don't remember ever meeting anyone who had a student loan.

The total debt shouldered by Americans has hit another record high, rising to $13.5 trillion in the last quarter, while an unusual jump in student-loan delinquencies could provide another signal that the U.S. economic expansion is growing old. Flows of student debt into serious delinquency - of 90 or more days - rose to 9.1 percent in the third quarter from 8.6 percent in the previous quarter, the Federal Reserve Bank of New York reported on Friday. That propelled the biggest jump in the overall U.S. delinquency rate in seven years. Total household debt, driven by a $9.1 trillion in...

Back in the summer, it seemed that the Republican/conservative vision for higher education reform was building momentum. A House GOP bill called the PROSPER Act was on the verge of moving toward passage and education secretary Betsy DeVos was implementing regulatory changes meant to undo some Obama-era policies such as the “Gainful Employment” rule and aggressive Title IX mandates. Then, the landscape of higher education policy was dramatically changed in the 2018 midterm elections with the House of Representatives going to the Democrats. Politicians with a completely different approach to higher ed will now have a loud voice. The Republican/conservative...

Chad Haag considered living in a cave to escape his student debt. He had a friend doing it. But after some plotting, he settled on what he considered a less risky plan. This year, he relocated to a jungle in India. "I've put America behind me," Haag, 29, said. He now lives in a concrete house in the village of Uchakkada for $50 a month. His backyard is filled with coconut trees and chickens. "I saw four elephants just yesterday," he said, adding that he hopes to never set foot in a Walmart again. His debt is currently on its...

The Aim Higher Act would let borrowers out of loans they could afford to pay back. Should the Democrats regain control of the House of Representatives in November, their largely unnoticed plan to forgive billions of dollars in student loans at taxpayer expense will be on the agenda. Many borrowers with the means to repay would qualify. The plan was devised by the top Democrat on the education committee, Representative Bobby Scott (Va.), as part of the Aim Higher Act, a reauthorization of student-aid programs. And earlier this month a group of Senate Democrats led by Jeff Merkley (Ore.) introduced...

It's dispiriting, for anyone who cares about the sheer capacity of government to implement policy, to learn that the Department of Education has failed to process 99% of requests for student loan forgiveness submitted by some 1.2 million borrowers who believe they qualify for a discount program aimed at helping those engaged in public service jobs. The report from the Government Accountability Office, based on its review of the Obama-era program, does not do much to instill more trust in government. But that's not the most important problem with the Public Service Loan Forgiveness Program. The core idea — that...

A program allowing public servants to receive student loan forgiveness has rejected more than 99 percent of its applicants because of confusion about the program and a lack of coordination with the company running it, a government audit report showed. The rejection statistic, which had been included in a statement from the Department of Education on Sept. 19, was the subject of a government audit released Thursday. The audit report from the Government Accountability Office noted "the large number of denied borrowers suggests that many are still confused by the program requirements." It also criticized the DOE for not cooperating...

When Education Secretary Betsy DeVos proposed revoking the “gainful-employment” rule last month, critics pounced, claiming that it would “pad the pockets of for-profit colleges,” in the words of Washington’s Senator Patty Murray. In fact, throwing out the rule—penalizing schools whose graduates have lots of debt relative to their earning power—will merely level the playing field. Why should for-profit colleges, the rule’s target, be held to a higher standard than nonprofits, when plenty of for-profit schools provide students with the skills necessary for employment, and plenty of nonprofit schools don’t? DeVos is on the right track. It’s time to stop using...

No one can accuse Education Secretary Betsy DeVos of inaction. Just within the past few weeks, her Department of Education announced the overhaul of two major Obama-era regulations. The next stage of DeVos’ agenda will review several of the rules governing which higher education institutions and programs are eligible for federal funding, with an eye toward giving colleges more flexibility. The changes DeVos will likely attempt highlight a dilemma all conservative higher-education reformers face: the tension between promoting innovation and protecting taxpayers. While still in development, DeVos’ agenda comes down firmly on the side of creating a more hospitable environment...

For Alexandria Butler-McDow, 28, going to university didn’t provide the freedom and financial security she'd hoped for. After graduating with an associate’s degree from the California Culinary Academy (CCA) in San Francisco, CA, in 2008, Butler-McDow struggled to find a job that would allow her to support herself and her disabled mother while also paying off her enormous student loan bill. Hopeful that a more advanced degree would help her make more money and better manage her debt, Butler-McDow went on to pursue a bachelor’s degree in culinary nutrition, concentrating on clinical dietetics at Johnson and Wales University (JWU) in...

NEW YORK (AP) — The government’s top official overseeing the $1.5 trillion student loan market resigned in protest on Monday, citing what he says is the White House’s open hostility toward protecting the nation’s millions of student loan borrowers. Seth Frotman will be stepping down as student loan ombudsman at the end of the week, according to his resignation letter, which was obtained by The Associated Press. He held that position since 2016, but has been with Consumer Financial Protection Bureau since its inception in 2011. Frotman is the latest high-level departure from the CFPB since Mick Mulvaney, President Donald...

Whether the nation’s $1.5 trillion student-debt problem represents a crisis is a matter of debate among policy makers and experts. But ask regular voters what they think and the answer seems pretty clear. More than half of Republicans, 67% of Independents and 71% of Democrats agree that student debt is a crisis, according to a recent poll of 1,000 voters conducted by Lake Research Partners and Chesapeake Beach Consulting on behalf of Americans for Financial Reform and the Center for Responsible Lending, two consumer advocacy organizations. “It’s pretty clear that regardless of political orientation, people see it not just as...

When 39 university associations send an open letter to Congress expressing “grave reservations” about proposed legislation, you can be sure that money is involved. No matter how they describe their concern about students, our colleges and universities have spent money at a pace well above inflation for decades, and they have raised tuition and fees in tandem. The federal student loan program has been their “enabler,” so they want to keep the money flowing.New buildings, new stadiums, fitness centers, luxury apartments, a “lazy river” at Louisiana State University, climbing walls at Notre Dame and Rutgers, and a $120 million refurbishing...