THE FINAL CALL: Will new student loan debt program really help?

Career College Central Summary:

  • The President signed a Presidential Memorandum directing the Department of Education and other federal agencies to work across the federal government to do more to help borrowers afford their monthly loan payments including:
  • (1) a state-of-the-art complaint system to ensure quality service and accountability for the Department of Education, its contractors, and colleges, (2) a series of steps to help students responsibly repay their loans including help setting affordable monthly payments, and (3) new steps to analyze student debt trends and recommend legislative and regulatory changes.
  • Leslie Parrish, deputy director of research at the Center for Responsible Lending welcomes the changes, “Faulty and inaccurate communications are all too common traits among the companies that now service more than $1 trillion of student debt. There is a lack of basic protections and information about repayment options and a record of poor treatment for those struggling to make monthly payments.”
  • “The Department of Education must look to improve communication with student loan servicers; require better information about loan repayment options and develop systems that will provide rapid and real relief for people struggling under the burden of student debt. We urge the Department to enact these changes as swiftly and comprehensively as possible.”
  • But not everyone is welcoming these changes.
  • Jeffrey Dorfman, an economics professor at the University of Georgia wrote for Forbes Magazine, “The problem with this supposed bill of rights is that nothing in it will have any impact on the true cost of a college education. Rather, it is mostly about shifting the costs onto others.”
  • “If one reads the first three points, they suggest that somebody unnamed should subsidize college so that it is affordable for all, that resources should be available from some unnamed source to pay for college, and that the priority for any student loan payments be affordability not actually paying back what is owed. All of these points focus the issue of affordability onto making somebody else pay.”
  • He proposes that students find other ways to pay for college such as:  attending an in-state public college rather than a (likely much more expensive) private one, to work part-time while attending college, even to live at home while doing your first two years at a community college or other less expensive local option and then transferring to a better college for your final two years.

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