Student Debt Crisis http://studentdebtcrisis.org Your One Stop Hub For Student Debt Issues Tue, 28 Jun 2016 18:08:26 +0000 en-US hourly 1 Millennials and the Future of Work in the Golden State Summit http://studentdebtcrisis.org/millennials-and-the-future-of-work-in-the-golden-state-summit/ Tue, 28 Jun 2016 17:22:28 +0000 http://studentdebtcrisis.org/?p=4792  Millennials and the Future of Work in the Golden State Summit University of California Berkeley Goldman School of Public Policy 2607 Hearst Ave, Berkeley, CA 94720 July 21st – 22nd @ 8:30AM   We are excited to announce that our executive director Natalia Abrams will be a panelist at the Millennials and the Future of […]

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CGIF Summit

 Millennials and the Future of Work in the Golden State Summit

University of California Berkeley Goldman School of Public Policy

2607 Hearst Ave, Berkeley, CA 94720

July 21st – 22nd @ 8:30AM

 

We are excited to announce that our executive director Natalia Abrams will be a panelist at the Millennials and the Future of Work in the Golden State Summit.

This event will take place on the campus of U.C. Berkeley on July 21st and 22nd, and will address the major economic challenges facing young Californians. This event is open to the public and is a great place for students and young professionals to network with other youth activists and leaders. Please feel free to attend- breakfast and lunch will be provided.

REGISTER HERE: ADD YOUR VOICE TO HOW WE SHAPE THE FUTURE OF WORK IN CALIFORNIA

Below you will find both a flyer and agenda for the event.



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2016 Report on the Real Cost of Student Loans http://studentdebtcrisis.org/4782-2/ Wed, 15 Jun 2016 20:12:04 +0000 http://studentdebtcrisis.org/?p=4782 Introduction Student loan debt now stands at more than $1.35 trillion, a figure that has nearly tripled over the past decade. With more than 43.3 million Americans holding student loan debt, according to the Federal Reserve, understanding the true cost of student loan debt has become more important than ever before. Estimates for the average student loan […]

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By: GoodCall

Introduction

Student loan debt now stands at more than $1.35 trillion, a figure that has nearly tripled over the past decade. With more than 43.3 million Americans holding student loan debt, according to the Federal Reserve, understanding the true cost of student loan debt has become more important than ever before.

Estimates for the average student loan debt held by each borrower vary widely. The Institute for College Access & Success estimates average student loan debt at $28,950 per student, while other experts have reported that the average figure for the class of 2016 is now along the lines of $37,172.80 per borrower.

For student borrowers, however, the cost of student loans is much higher than just the sum of principal and interest. GoodCall conducted an analysis on the true cost of student loan debt to reveal how much student loans are really affecting college graduates, from delays in homeownership and lower retirement savings to lifestyle sacrifices and lessened financial security overall.

GoodCall’s study encompasses three life areas: Homeownership, Retirement, and Lifestyle. Each section contains unique findings and insight into the real cost of student loans for borrowers.

GoodCall’s research is based on a 23-year old graduate with a bachelor’s degree who starts earning the current average starting salary of $50,651[1] after graduation. The analysis compares four debt scenarios:

  • A graduate who has no student loan debt
  • A graduate who has $12,000 in student loans
  • A graduate who has $28,950[2] in student loans
  • A graduate who has $50,000 in student loans

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Before diving into the cost of student loans for college graduates, here’s what student loans look like today at the national and state levels:

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Homeownership

Average student loan debt costs college graduates five extra years to homeownership

GoodCall’s analysis on the cost of student loans and home-buying finds that it takes graduates with the average student loan debt of $28,950 about 5 years longer to save a 20% home down payment. These graduates have almost $50,000 less in home equity 15 years after graduation compared to debt-free graduates.

Homeownership has fallen over the past decade. However, for college graduates with student loan debt, the downward trend is even more marked, according to research by the Federal Reserve Bank of New York. Though some argue that the verdict is still out on whether student loan debt impacts the rate of homeownership among college graduates, what is clear is that after college, graduates with student debt must use part of their income to pay down loans. This means less income is available for saving compared to debt-free graduates.

It also means that graduates with student loan debt will have to save at a higher rate than their debt-free counterparts to buy a home sooner. This points to another challenge student loan borrowers face: making tough decisions over whether to pay student loans off as quickly as possible or save for big purchases like a home.

In fact, a recent Harvard study reveals the consequences for wealth building that these difficult decisions can have over the long-term, where college-educated households with student loan debt were found to have significantly less in assets, cash savings, and net wealth compared to college-educated households without student loans.

Key findings for homebuying timeline

  • A 23-year-old debt-free college graduate today will be ready to buy a home with a 20% down payment in 2021 at age 28. That’s five years earlier than the 33-year-old[3] average home buyer today.
  • Graduates with $12,000 in student loan debt can expect to save until 2022 before they’re able to put a 20% down payment on a median price home.
  • A 23-year-old graduate with $28,950 in student loan debt today will be saving until 2026 before she can make a 20% down payment on a home, at age 33 – the current average age for home buying.
  • Graduates with $50,000 in student loans will be saving until age 36 in 2029 before they’ll have enough for a 20% home down payment.

Other key findings

  • Extending repayment terms or opting for a lower down payment will end up costing graduates more in the long run. Saving more, even while repaying student loans, turns out to have a big impact on leveling how long it takes a graduate with student loan debt to save for a home compared to their debt-free peers.
  • Having a higher starting salary can also significantly cut down the gap between debt-free graduates and those with student loan debt. For student loan borrowers with higher interest rates, refinancing to a lower rate can also move the homebuying timeline forward slightly.
  • Graduates putting off marriage to take care of student loan debt before tying the knot will take significantly longer to save for a home than if they were married and saving together – even if both partners have higher-than average student loan debt loads.

Setbacks to home equity

Waiting longer to buy a home can mean missing out on accruing home equity, an important part of building wealth and financial security. Home equity is how much of the home’s current value is owned by the homeowner. This is calculated by taking the current market value, which typically grows year over year, and subtracting any remaining mortgage payments.

By age 38, a debt-free graduate will have already accumulated almost $140,000 in home equity[4]. That’s over $65,000 more built up wealth for a debt-free graduate in comparison to one with $50,000 in student loans. The graph below reveals how much less in home equity dollars graduates with student loan debt will have 15 years out of college. Graduates with student loan debt will owe significantly more than they own of their more costly homes compared to debt-free peers.

Saving 5% more shaves years off the road to homeownership

There are ways to speed up the timeline to buy a home. One of the most effective ways is to save more by making lifestyle and budget adjustments. Graduates who save 20% of their income minus student loan payments can shift the homebuying timeline forward significantly.

In contrast, graduates who save less of their income minus student loan payments add on years to how long it’ll take to save for a home. The graph below shows how savings rates can help or harm how long it takes to save a 20% down payment.

How starting salary shapes the homebuying timeline

The timeline to homebuying strongly depends on a recent graduate’s starting salary as well as opportunities for salary increases. The graph below reveals how starting at a higher salary, like the 2016 average of $64,891 for engineering majors[4], for example, can reduce the time to homeownership. In contrast, starting at a lower salary, like the 2016 average of $34,891 for education majors or $46,585 for social science majors, can mean more years of saving for a 20% down payment.

Delaying marriage to pay off student loans & the homebuying timeline

In a recent report, Zillow found that only 40% of first-time homebuyers were married. Married graduates, each with student loan debt of $28,950 and with both partners earning similar salaries, can save a 20% down payment in half the time it would take them individually. Even when both partners are paying down higher levels of debt, like $50,000 each, the timeline for saving is reduced by three years, as the graph below reveals.

Recent research by the Rand Corporation finds that women with student loan debt are putting off getting married. When taking into consideration the gender wage gap that also impacts the ability of women to save for large assets like a home, the cost of student loan debt becomes even higher for women putting off marriage in comparison to their married counterparts.

Impact of refinancing student loan debt on homebuying timeline

Alternatively, some graduates may look for ways to free up more money to save towards a down payment. One way to do this is through refinancing student debt to lower interest rates. GoodCall’s analysis reveals that for borrowers at higher debt levels, refinancing to lower rates yields modest gains in the time it will take to save for a 20% home down payment. For borrowers with less student loan debt, however, the gains are minimal, representing a difference of months.

For private loan student borrowers, refinancing is generally a good solution, allowing borrowers to save more and decrease the overall amount repaid over time. For federal student loans borrowers, however, it’s important to weigh costs and benefits. If you choose to refinance through a private lender to obtain a lower interest rate, it will also mean giving up federal loan benefits like access to income-driven repayment options and loan forgiveness.

Extending student loan repayment: short-term gains vs. long-term losses

Another way to free up money for savings in the short term is to extend student loan repayment terms to 20 or 25 years and/or opt for an income-driven repayment plan. However, the figure below shows how much more interest borrowers who extend repayment terms will pay. For borrowers who choose income-driven repayment plans, any portion of the loan that is forgiven at the end of the term will create additional tax obligations.

Added costs of opting for a lower down payment

Not all lenders require a 20% down payment. Putting less money down is another way to get to home ownership sooner. However, lower down payment options typically involve having to take on the added costs of mortgage insurance and potentially higher interest rates. These buyers accrue home equity more slowly and end up paying more interest over the full loan term in comparison to buyers who are able to put more down up front.

Using the homebuying timeline for debt-free graduates and graduates with $12,000, $28,950, and $50,000 in student loans discovered by GoodCall’s analysis, the graph below illustrates how much more a graduate who puts just 10% down on a home will have to pay on a monthly basis compared to buying with a 20% down payment.

Retirement

Average student loan debt costs approximately $500,000 in lost retirement savings

GoodCall’s analysis finds that having $28,950 in student loans amounts to nearly half a million dollars in lostretirement savings for college graduates, compared to a debt-free graduate. College graduates that extend their loan repayment terms to 2o or 25 years will have even less retirement savings over time.

A recent study the Center for Retirement Research at Boston College found that having the average student loan amount would cause retirement insecurity to rise by more than 5% percentage points. This level of retirement insecurity is similar in magnitude to an across-the-board cut of nearly 20% to future Social Security benefits, the study reveals.

What’s more, with the future of Social Security up for debate, saving for retirement is even more important for recent college graduates who may not be able to count on the same level of benefits as earlier generations. With many graduates choosing to save less for retirement while they pay their student loans, GoodCall’s analysis reveals that this could come at a much bigger cost than the student loans themselves, amounting to hundreds of thousands of dollars in lost retirement savings and forcing a retirement age well beyond age 65 for many debt-laden college graduates.

Key findings for retirement savings

  • Having $28,950 in student loans costs nearly the same as having $50,000 in student loans when it comes to lost retirement savings, with graduates at both student debt levels having approximately half a million dollars less in retirement savings compared to debt-free graduates.
  • Saving at a higher rate, like 10% or 20% of income, significantly narrows the gap in retirement savings between graduates with student debt and those who are debt-free.
  • Extending loan repayment terms to 20 or 25 years on larger student debt loads has a more damaging impact on retirement savings. Compared to debt-free graduates, graduates with $50,000 in student loans on a 25-year repayment plan will have close to one million dollars less in retirement savings.

By age 65, a debt-free graduate will have more than $1.4 million in retirement savings, based on savings 6% of total income and an employer 401(K) match of 3%. In comparison, a graduate with student loan debt of $50,000 can expect to have just under $908,000, a difference of more than half a million dollars. What’s even more striking is that a graduate with $28,950 will have just over $911,000 in retirement savings, a difference that also hovers around $500,000.

Choosing to save less for retirement during the first ten years of work, in order to make monthly student loan payments, can mean debts of $28,950 or $50,000 both end up costing over $500,000 from repayment to retirement.

At age 65, a graduate with the average student loan debt of $28,950 will have nearly 36% less in retirement savings compared to a debt-free graduate saving at a rate of 6% of income. However, if a graduate with the average student loan debt is able to save a higher percent of total income, for example, 20%, this narrows the gap in retirement savings to just under 11% less.

The chart below reveals how saving more or less for retirement affects the savings gaps for graduates with student loan debt of $12,000, $28,950, and $50,000 as compared to a debt-free graduate.

Having a higher interest rate on student loans also impacts retirement savings at age 65. A graduate with $12,000 in student loans with a 10.5% interest rate will have almost $77,000 less in retirement savings than a student loan borrower with the same amount of debt with a 3.5% interest rate. Compared to a student loan borrower with same debt amount at a 6.8% interest rate, the difference is still more than $42,000 less in retirement savings.

For graduates with higher debt loads, it may be tempting to extend repayment terms from 10 years to 20 or 25 years. However, doing this actually reduces retirement savings over time, as graduates are diverting resources away from retirement for more years and paying more interest over time. A graduate with $50,000 in student loan debt will have close to $870,000 less in retirement savings if he chooses a 20-year repayment term. With a 25-year repayment term, this figure is just shy of a million dollars less in retirement savings, compared to a debt-free graduate.

The graph below shows how extending repayment terms can have significant negative impact on total retirement savings, particularly for graduates holding more student loan debt.

Lifestyle

Average student loan debt costs more than a small luxury car, dozens of vacations and more than half of a child’s college savings

Having a college degree pays off in higher lifetime earnings overall, with young adults ages 25-34 holding a bachelor’s degree earning a median salary of $48,500 in 2013, according to the National Center for Education Statistics, compared $30,000 for those with just a high school diploma or GED or $37,500 for those with an associate’s degree.

However, when college degrees are paid for with student loans, the benefits of earning a higher income are less, since graduates must use part of that income to pay off their debt. This means diverting money away from savings for retirement or a down payment on a home, as well as having less disposable income for other aspects of life, from buying a car or setting aside money for their child’s college to eating out a couple nights a week, heading to a show or even taking a vacation. Unfortunately, many borrowers don’t realize what student loans will actually cost until they’re already in debt and having to make monthly payments for 10, 20 or even 25 years.

A recent report by EdAssist reveals that 58% of college graduates with student loan debt would give up buying a new car, 59% would give up a vacation, and 46% would sacrifice saving for their future in order to get rid of their student loan debt. GoodCall’s analysis reveals that, in fact, student loan borrowers do make all of these lifestyle sacrifices and more when you add up the full cost of student loan debt.

Key findings:

  • $28,950 in student loans will end up costing $39,978.78 – more than the cost of 55 dinners out for two, 24 concert tickets, 3 week-long Caribbean cruises for two, a family vacation to Disney, plus a small car.
  • Debt-free graduates will have over $73,000 to send a child off to college – or about 3 full years at a public 4-year institution. Graduates with $28,950 to $50,000 in student loans will have less than half of that – just under $32,000, or not even 1.5 years of college at today’s prices.
  • With the money used to repay the average student loan debt, graduates could have taken dozens of cruise vacations or even bought a luxury car.

The graph below paints a picture of the kind of lifestyle sacrifices student loan borrowers may be giving up in exchange to pay back student loans. To give an idea of the real cost of student loans, the average student loan borrower will repay over ten years what it would cost to buy a compact car, 55 dinners out for two, 24 concert tickets, three week-long Caribbean cruises for two, and a family vacation to Disney.

For those dreaming of expensive cars, trucks or SUVs, having student loan debt may set you back on the way to seeing this dream come true. The total cost to repay $28,950 in student loans is actually more than the average price of an entry-level luxury car, like a Mercedes-Benz C-Class for example. And, with what it costs to repay $50,000 in student loans, a graduate could buy a full-size pickup truck or luxury SUV and have money leftover.

Here’s some more food for thought: the total amount of monthly payments it would l take to repay just $12,000 in student loan debt is more than what it would cost for two people to take 13 seven-day cruises in the Caribbean. The cost of $28,950 in student loans is roughly the equivalent of 32 Caribbean cruises for two. And with what it would cost to repay $50,000 in student loans, a college graduate and a companion could take 56 week-long cruises.

It’s not only about taking vacations or buying new cars, either. College graduates with families may be sacrificing saving for their children’s education in order to pay back their student loan debt. This could lead to a situation where future generations don’t have enough college savings and may also turn to debt to finance their higher education, creating a vicious cycle. The graph below shows how much more a debt-free graduate will have saved up for their kid’s college compared to graduates with student loans, who are diverting resources away from college savings to pay back their own higher education debt.

Methodology and Notes

Methodology

Homeownership

  • Student loan repayment calculations are based on a 10-year repayment plan at an interest rate of 6.8%, unless otherwise noted for comparative purposes.
  • Age to homebuying calculations are based on a savings rate of 15% of annual income minus student loan payments, unless otherwise noted for comparative purposes.
  • Annual salaries are increased by 3% year-over-year to account for wage growth and inflation.
  • Savings totals are based on monthly deposits to high-yield savings account compounding monthly at a 1% annual interest rate.
  • Home prices start at the median US home sale price of $214,000[5] as of March 2016, and an annual price appreciation rate of 1.986%[6] is applied each year.
  • Calculations for added monthly costs of putting 10% versus 20% down on a new home are based on a mortgage interest rate of 3.5%, private mortgage insurance 6.25% per year, 1.25% property taxes per year, and 0.35% home insurance per year.

Retirement

  • Retirement savings calculations are based on a savings rate of 6% of annual income minus student loan payments, unless otherwise noted for comparative purposes.
  • Student loan payment calculations are based on a 10-year repayment plan at an interest rate of 6.8% unless otherwise noted.
  • Annual salaries are increased by 3% year-over-year to account for wage growth and inflation.
  • Retirement savings totals are based on bi-monthly contributions to a 401(k) account with a 3% employer contribution match and an annual yield of 6%, compounding bi-monthly.
  • Total retirement savings are calculated at age 65.

Lifestyle

  • Costs for a seven-day Caribbean cruise for two are based on the base price of $535 per person for double occupancy, plus 15% in taxes.
  • Average car prices are based on Kelley Blue Book December 2015 estimates.
  • Price for dinners are based on Zagat’s 2015 national average price of $39.40 per person to eat out.
  • Costs for a Disney vacation are based on 2015 Hipmunk estimates of $348.30 per night hotel stay at Disney World Resort and $1,272 in flights for a family of four, plus allowances for 7-day park tickets, gifts/souvenirs/shows/activities, and food.
  • Costs for concert tickets are based on average 2015 music tour ticket price of $78.77, according to Statista.
  • Child college savings are based on monthly contributions of 5% of total income to 529 college savings plan over 18 years, earning a conservative return of 1% annually.
  • Cost of college is based on 2015 estimate by The College Board of $24,061 per year to attend a public 4-year school, including tuition, books/supplies, room and board, transportation, and other expenses.

Notes

[1] Average starting salary for a college graduate with a bachelor’s degree was $50,651 at the end of 2015, according to NACE – http://www.naceweb.org/s11182015/starting-salary-class-2015.aspx

[2] Average student loan debt was $28,950 in a state-by-state study released in 2015 by the Institute for College Access & Success – http://ticas.org/posd/map-state-data-2015

[3] A 2015 study found that the average home buyer today is 33 years old and 60% are single, according to Zillow – http://zillow.mediaroom.com/2015-08-17-Todays-First-Time-Homebuyers-Older-More-Often-Single

[4] Home equity is calculated by subtracting the estimated remaining mortgage amount, according to Zillow, from the current home price.

[5] A study released in early 2016 shows the average starting salaries for engineering majors at $64,891, education majors at $34,891, and social sciences majors at $46,585, according to NACE – http://www.naceweb.org/s01272016/stem-grads-earn-highest-starting-salaries.aspx

[6]Zillow data shows the median home sale price in the US was $214,000 as of March 2016 – http://www.zillow.com/home-values/

[7] The Federal Housing Finance Agency (FHFA) calculated the seasonally adjusted percent change in house prices over 5 years was 9.93% in 2014, based on U.S. Census data. Allocated on a yearly basis, this would equal 1.986% annual price appreciation – http://www.fhfa.gov/AboutUs/Reports/ReportDocuments/HPI%203Q%202014.pdf

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Report: For-Profit College Students Earn Less After Graduation Than They Did Before http://studentdebtcrisis.org/report-for-profit-college-students-earn-less-after-graduation-than-they-did-before/ Wed, 01 Jun 2016 18:31:14 +0000 http://studentdebtcrisis.org/?p=4762 For-profit college chains often market themselves to non-traditional students — single parents, lower income individuals, military servicemembers — as a viable path to better job prospects and more money. However, a new report suggests that enrolling in of these sometimes costly schools may not help students reach their goals. A study recently published by the National […]

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For-profit college chains often market themselves to non-traditional students — single parents, lower income individuals, military servicemembers — as a viable path to better job prospects and more money. However, a new report suggests that enrolling in of these sometimes costly schools may not help students reach their goals.

A study recently published by the National Bureau of Economic Research found that most students who enroll in certificate, associate and bachelor’s programs at for-profit colleges and universities generally see a decline in earnings five or six years after attendance, when compared to how much they earned before attending classes, Inside Higher Ed reports.

“Analysis of degree-seeking students suggests that on average associate’s and bachelor’s degree students experience a decline in earnings after attendance, relative to their own earnings in years prior to attendance,” the report states.

The study is based on Dept. of Education and the Internal Revenue Service data on 1.4 million students who enrolled in for-profit schools between 2006 to 2008.

Authors of the study suggest that the finding of negative economic impact of enrolling in for-profit colleges could be partially due to a large number of students who never graduate, but still acquire loads of student loan debt…

Continue Reading at Consumerist…

By: Ashlee Kieler

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Elizabeth Warren presses the Education Department to rein in Navient http://studentdebtcrisis.org/elizabeth-warren-presses-the-education-department-to-rein-in-navient/ Wed, 01 Jun 2016 18:28:38 +0000 http://studentdebtcrisis.org/?p=4759 Sen. Elizabeth Warren (D-Mass.) is ratcheting up pressure on the Department of Education to cut ties with Navient Solutions, one of the companies that collects and applies federal student loan payments on behalf of the government. The progressive leader sent a letter to the department’s chief operating officer, James Runcie, this week, raising concerns about the student […]

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Sen. Elizabeth Warren (D-Mass.) is ratcheting up pressure on the Department of Education to cut ties with Navient Solutions, one of the companies that collects and applies federal student loan payments on behalf of the government.

The progressive leader sent a letter to the department’s chief operating officer, James Runcie, this week, raising concerns about the student loan servicer’s “extravagant and increasing lobbying expenditures.” Warren said her staff found that in addition to the $710,000 that Navient spent lobbying Congress on its own, the company paid outside firms an additional $155,000 to lobby on its behalf in the first three months of the year. Navient, she said, has spent a total of $3.7 million on lobbying since 2015, and almost $24 million since 2010.

“I am mystified by the scope of these expenditures,” Warren wrote. “Navient should be focused on and investing in improving its abysmal student loan servicing operations, not lobbying Congress and the administration in search of sweetheart deals.”

Officials at Navient say the lobbying expenses Warren lists are inaccurate, and the money the company spent on lobbying has actually declined by 30 percent year over year. They say Navient has been lobbying Congress to streamline student loan repayment options and default rehabilitation, among other things to help borrowers…

Continue Reading at The Washington Post…

By: Danielle Douglas-Gabrielle

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Black College Graduates Holding More Student Loan Debt Compared to Their White Peers http://studentdebtcrisis.org/black-college-graduates-holding-more-student-loan-debt-compared-to-their-white-peers/ Thu, 12 May 2016 16:42:09 +0000 http://studentdebtcrisis.org/?p=4745 There’s more involved than you might expect when it comes to predicting who has the most student loan debt. New research shows that Black students, even in middle-income families, are taking on more debt to earn a degree in comparison to their white peers. Combined with the race gap in graduationand earnings, where even when […]

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There’s more involved than you might expect when it comes to predicting who has the most student loan debt. New research shows that Black students, even in middle-income families, are taking on more debt to earn a degree in comparison to their white peers. Combined with the race gap in graduationand earnings, where even when students earn the same degree from the same school, black Americans are getting paid less yet on the hook for more student loan debt.

The journal Children and Youth Services Review recently published a study led by Michal Grinstein-Weiss of the Center for Social Development at Washington University in St. Louis. In it, researchers report “Low-to-moderate income (LMI) black students and graduates accrue on average $7,721 more student debt than their white counterparts.” This was the result even when accounting for other factors like socioeconomic status in families of origin.

That additional debt has long-term consequences for growing wealth over the long term, as other research has found that middle-class white households have ten times higher wealth than their black peers. Even levels of employment are unbalanced between white and black graduates, with significantly higher unemployment among black college graduates…

Continue Reading at GoodCall…

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Veterans Groups, Student Advocates Stand Up Against Partnership between The Ellen DeGeneres Show and The University of Phoenix http://studentdebtcrisis.org/ellen-university-of-phoenix-petition/ Fri, 06 May 2016 18:10:55 +0000 http://studentdebtcrisis.org/?p=4727              FOR IMMEDIATE RELEASE May 6, 2016 CONTACT: Natalia Abrams natalia@studentdebtcrisis.org 310-365-1069 RELEASE: Veterans Groups, Student Advocates Stand Up Against Partnership between The Ellen DeGeneres Show and The University of Phoenix Higher Ed, Not Debt Partners Launch Petition Asking Host Ellen DeGeneres to Drop Partnership with For-Profit College Under Investigation […]

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Screen Shot 2016-05-06 at 11.07.18 AM

 

 

 

unname1d unnamed unnamed

 

 

 

 FOR IMMEDIATE RELEASE

May 6, 2016

CONTACT: Natalia Abrams

natalia@studentdebtcrisis.org

310-365-1069

RELEASE: Veterans Groups, Student Advocates Stand Up Against Partnership between The Ellen DeGeneres Show and The University of Phoenix

Higher Ed, Not Debt Partners Launch Petition Asking Host Ellen DeGeneres to Drop Partnership with For-Profit College Under Investigation by the Federal Trade Commission

Washington, D.C.— Veterans groups and student advocacy organizations are speaking out after The Ellen DeGeneres Show awarded a stay-at-home mom a $25,000 scholarship to the University of Phoenix, a heavily-scrutinized for-profit college currently under investigation by the Federal Trade Commission and the California Attorney General. The veterans and student advocacy organizations, part of the Higher Ed, Not Debt coalition, are voicing their opposition to the promotional partnership, which will also provide ten additional scholarships of $25,000 each to participating entrants. The partnership is widely perceived as an egregious departure from the progressive positions DeGeneres typically champions, and another example of the University of Phoenix preying on vulnerable Americans with predatory and misleading marketing tactics.

Promotional posts of the partnership on DeGeneres’ social media accounts have been removed in the wake of the public outcry, but neither DeGeneres nor representatives of her show have issued a public comment addressing the partnership, or confirmed whether or not DeGeneres was paid to air the segment. Veterans groups, many of which have called out University of Phoenix for abusing billions of GI Bill dollars to aggressively recruit returning veterans, were equally outraged that DeGeneres would lend support to a school that the federal government placed on probation for unlawful recruiting practices targeting veterans.

“Veterans using their GI Bill education benefits deserve better than a school that spends less than $1,000 per student on instruction while employing thousands of recruiters and spending exorbitant amounts on recruiting, executive salaries, and profits,” said Walter Ochinko, Policy Director for Veterans Educations Success. “Last fall, the Department of Defense temporarily suspended new enrollment by Phoenix for service-members using Tuition Assistance because of unauthorized recruiting on military bases, inappropriate use of military seals as a marketing tool, and ongoing investigations into allegations of deceptive marketing and advertising by both the Federal Trade Commission and the California Attorney General. The DeGeneres plug for Phoenix is yet another example of the Phoenix commitment to marketing rather than focusing on providing a quality education to all students, including veterans and service-members.”

Already, a petition calling on The Ellen Show to drop the partnership with Phoenix has garnered over 6,700 signatures. Today, Generation Progress and Higher Ed, Not Debt are launching an “Email Ellen” tool to allow student loan borrowers to email Ellen directly to voice their concerns. Groups are also planning to hand-deliver the petitions calling for The Ellen Show to distance itself from the University of Phoenix at its Burbank, California studio.

“Ellen has been an important champion on so many progressive issues in the past, and that’s why seeing her lend her brand to one of the most predatory for-profit universities out there is so difficult to swallow,” said Maggie Thompson, Executive Director of Generation Progress. “Using her public platform to support the University of Phoenix, and refusing to reveal whether she was paid for the segment is unacceptable.  The University of Phoenix exploits vulnerable Americans and is so far from what we’ve come to love and expect from Ellen. We are calling on Ellen to revoke her support for this company that abuses taxpayer dollars for their own profit, evades and manipulates government regulations, and provides little educational payoff for its high cost of tuition.”

With the University of Phoenix’s well-documented record of driving its enrollees into debt while providing them with a low-value education, student advocacy organizations were quick to sound off as well. Noting the discrepancy between Phoenix’s marketing versus instructional expenses, as well as the fact that0 only one-in-five University of Phoenix students graduates within 150 percent of time (6 years for a bachelor’s degree and 3 years for an associate’s degree), the groups were displeased that DeGeneres would offer the company a platform to continue its dangerous practices.

“I was truly disappointed to see that Ellen, a typically progressive champion, had compromised on important values like college affordability and higher education,” said Natalia Abrams, Executive Director of Student Debt Crisis. “Her partnership with the predatory for-profit college University of Phoenix gives her stamp of approval to a company that has earned itself a concerning reputation for defrauding veterans and targeting students. On her show, Ellen offered a scholarship that hardly covers the Phoenix’s inflated tuition rates, misleading millions of viewers who may very well be the effected by the Phoenix’s alarming student loan default rates. Student Debt Crisis stands for the thousands of our members who have been harmed by for-profit colleges and asks Ellen to end her partnership with the University of Phoenix, now.”

To sign the petition, click here.

For more information or to speak with an expert, contact Natalia Abrams at natalia@studentdebtcrisis.org or 310-365-1069

 

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Student Debt Crisis takes the White House Student Debt Challenge http://studentdebtcrisis.org/student-debt-crisis-takes-the-white-house-student-debt-challenge/ Thu, 28 Apr 2016 12:58:14 +0000 http://studentdebtcrisis.org/?p=4693 Student Debt Crisis plans to conduct a series of webinars to reach more than 800,000 people within their membership network.   From WhiteHouse.gov Taking Action to Help More Americans Manage Student Debt Higher education is one of the most important investment individuals can make for themselves and for our country. Today, 11 of the 15 […]

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Student Debt Crisis plans to conduct a series of webinars to reach more than 800,000 people within their membership network.

 

From WhiteHouse.gov
Taking Action to Help More Americans Manage Student Debt

Higher education is one of the most important investment individuals can make for themselves and for our country. Today, 11 of the 15 fastest-growing occupations require a postsecondary education.

Many students access student loans to help finance their education; typically, that investment pays off, with bachelor’s degree recipients earning $1 million more in their lifetime and associate’s degree recipients earning $360,000 more, compared to their high school counterparts. But for some, burdensome student loan debt can present a challenge as they seek to start a career, raise a family, purchase a home, start a business, or save for retirement.

“I’m only here because this country gave me a chance through education.  We are here today because we believe that in America, no hardworking young person should be priced out of a higher education.  This country has always made a commitment to put a good education within the reach of young people willing to work for it.”

– President Barack Obama, Remarks on College Affordability, June 9, 2014

Read the entire Press Release here

Over 40 new student debt challenge takers. Earlier this month, the White House issued a call to action for colleges, universities, non-profits, businesses, state and local governments, and other employers to help more borrowers better understand their options, and to take action to enroll those borrowers in PAYE and related plans so they can manage their monthly payments and avoid delinquency and default. Today, we are highlighting a growing list of commitments from organizations working to inform their employees and members about PAYE and related plans, train human resources (HR) staff on the importance of helping borrowers understand their student loan repayment options and the steps individuals must take to enroll, and use digital platforms to highlight PAYE and related plans. In the few short weeks since the Debt Challenge was launched, there have been over 40 commitment makers, and we are encouraging more colleges, businesses, non-profits to take action. Several organizations are committing to take additional action (Partial list):

  •         Student Debt Crisis will continue their student loan education by conducting student loan trainings for more than 2,000 professionals through the National Housing Resource Center. They will also work with CalNonprofits to help them build out a student debt program educating between 400 and 1,000 nonprofit professionals about repayment options and public service loan forgiveness who can help spread the word. Student Debt Crisis plans to conduct a series of webinars to reach more than 800,000 people within their membership network.

Screen Shot 2016-04-27 at 11.05.20 PMScreen Shot 2016-04-28 at 8.00.50 AM

  •         National Housing Resource Center (NHRC) will train 500 housing counselors to help student loan borrowers qualify for income-driven repayment plans, by conducting a national training program for nonprofit housing counselors. The housing counselors will be able to work with their prepurchase, loss mitigation, and financial assistance clients and help them identify the appropriate plan.
  •         NerdWallet pledges to promote the use of income-driven repayment options when appropriate to the three million consumers that use their website monthly to make and manage financial decisions. Through easy-to-follow articles and free tools, NerdWallet breaks downs the basics of the plans, who they’re best for and how to enroll in them to ease the burden of student loan debt.
  •         The Center for American Progress, working in partnership with Generation Progress and Higher Ed, Not Debt, has educated their employees about the benefits of these programs for the last two years.  As part of the challenge they will educate, engage, and mobilize Americans – including their own employees – around the issue of income-driven repayment plans, beginning on $1T Day, the national day which marks student debt surpassing one trillion dollars. These efforts will include social media chats and in-person events, starting with a D.C. event with policy experts. Additionally, CAP, GP, and HEND will work with partner organizations to host webinars and workshops. Altogether, these efforts can reach 5,000 people.
  •         The Institute for College Access and Success (TICAS) will contact the more than 100,000 subscribers to their website, share information with their social media networks to remind them about income-driven repayment plans and encourage them to help spread the word to others.
  •         The University of California commits to regularly informing its more than 246,000 students and 200,000 faculty and staff about income-driven repayment options and public service loan forgiveness through its regular contacts, as well as by sending additional information to the main campus alumni relations offices, student services staff, and the system’s human resources professionals.

Learn about the Student Debt Challenge

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White House Fact Sheet – Student Debt Crisis Recognized for Student Debt Challenge Pledge http://studentdebtcrisis.org/student-debt-challenge/ Thu, 28 Apr 2016 12:10:33 +0000 http://studentdebtcrisis.org/?p=4713 THE WHITE HOUSE Office of the Press Secretary FACT SHEET: Taking Action to Help More Americans Manage Student Debt “I’m only here because this country gave me a chance through education.  We are here today because we believe that in America, no hardworking young person should be priced out of a higher education.  This country […]

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THE WHITE HOUSE

Office of the Press Secretary

FACT SHEET: Taking Action to Help More Americans Manage Student Debt

“I’m only here because this country gave me a chance through education.  We are here today because we believe that in America, no hardworking young person should be priced out of a higher education.  This country has always made a commitment to put a good education within the reach of young people willing to work for it.”

– President Barack Obama, Remarks on College Affordability, June 9, 2014

Higher education is one of the most important investment individuals can make for themselves and for our country. Today, 11 of the 15 fastest-growing occupations require a postsecondary education. That’s why the President has made historic investments to help millions of Americans afford college by doubling investments in grant and scholarship aid through Pell grants and tax credits, keeping interest rates low on federal student loans, and creating better options to help borrowers manage debt after college like the Pay as You Earn (PAYE) plan.

As detailed in a new post on student debt trends and state-by-state data being released by the Council of Economic Advisers, we are seeing these efforts pay off. More students are graduating college than ever before. More than four of five Direct Loan recipients with loans in repayment are current on their loans. Delinquencies, defaults, and hardship deferments are all trending downward, with nearly three million borrowers successfully accessing a pathway out of default through loan rehabilitation since 2010. And more students are taking action on their student debt when they need support, with nearly five million Direct Loan borrowers taking advantage of repayment options like the President’s PAYE plan, which caps monthly student loan payments at 10 percent of income, up from 700,000 enrolled in 2011.

Many students access student loans to help finance their education; typically, that investment pays off, with bachelor’s degree recipients earning $1 million more in their lifetime and associate’s degree recipients earning $360,000 more, compared to their high school counterparts. But for some, burdensome student loan debt can present a challenge as they seek to start a career, raise a family, purchase a home, start a business, or save for retirement.

Guaranteeing strong consumer protections and building a system of high-quality customer service are important components of a federal student loan system that expands college opportunity and provides reassurance to American families that pursuing a college degree and responsibly borrowing to pay for college will not threaten their future financial security.

Today, the White House is announcing new actions and highlighting the progress already made to help ensure the more than 40 million Americans with student loan debt understand their repayment options and access high-quality customer service, strong consumer protections, and targeted support to repay their student debt successfully.

New Actions on Student Debt

Over the past few years, the Administration has stepped up efforts to ensure that flexible repayment options are available to support Americans with federal student debt. Today’s actions build on that progress and provide a roadmap to guide and support borrowers as they seek to manage and repay their debt successfully:

·         New Goal to Enroll 2 million More Borrowers in Plans like Pay As You Earn (PAYE). The President’s PAYE and related income-driven repayment plans are available to help borrowers who may be struggling to manage their debt effectively. Yet, too many borrowers still do not know about this important option. Leveraging key improvements in loan servicing and customer service, better tools and resources, targeted outreach to borrowers, and partnerships with key external organizations under the Student Debt Challenge, the Administration is announcing a new goal to enroll two million more borrowers in plans like PAYE by this time next year.

·         Launch of StudentLoans.gov/Repay. To help borrowers easily navigate the complexity of student loan repayment options, the U.S. Digital Service and the Department of Education’s Office of Federal Student Aid have launched StudentLoans.gov/Repay to help drive students to their best repayment option in five steps or less. Built mobile-first, and using human-centered design, StudentLoans.gov/Repay was designed to make repayment information as easy to understand as possible.

·         Strengthening Consumer Protections through New Standards for Student Loan Servicing. The Department of Education and Department of the Treasury – after consulting with the Consumer Financial Protection Bureau (CFPB) and their work with Illinois Attorney General Lisa Madigan and other state attorneys’ general – have developed clear student loan borrower rights and protections in three key areas: (1) providing accurate and actionable information about account features, borrower protections, and loan terms; (2) establishing a clear set of expectations for minimum requirements for communication and services provided by student loan servicers, including adequate and timely customer service; and (3) holding servicers accountable for fixing errors, being responsive to borrowers, and resolving problems by ensuring that borrowers, federal and state agencies and regulators, and law enforcement officials have access to appropriate channels of recourse when violations of federal or state consumer financial laws occur. The Department of Education will ensure all borrowers with federal Direct Loans can rely on high-quality service in line with these standards and protections. The Department of Education will implement this effort as part of its new vision for servicing student loans.

·         Better Information to Help Borrowers Take Action on their Debt: CFPB Prototype Student Loan Payback Playbook. The CFPB is seeking comment on a new set of student loan servicing disclosures—a student loan Payback Playbook – that provides borrowers personalized information to better understand their repayment options and find a monthly payment they can afford. To help borrowers choose the best repayment plan with the most up-to-date information based on their circumstances, borrowers would see a plain language Playbook on their monthly bill, in regular email communications from their student loan servicer, or when they log into their student loan account. The Department of Education, working with the CFPB, will be finalizing and implementing these disclosures for federal loans borrowers.

·         Ensuring Effective Student Loan Counseling. The Department of Education will work to improve the timing and content of current loan counseling efforts, including statutorily required entrance and exit counseling, to help students make better borrowing decisions, increase college completion, promote successful loan repayment, and reduce delinquencies and defaults. Specifically, the Department will upgrade and redesign its Entrance and Exit Counseling tools on StudentLoans.gov – which serves 6.5 million students a year – based on user analytics and direct input from more than 500 borrowers, financial aid administrators, policymakers, and higher education organizations. The Department is also developing a loan counseling experiment to rigorously evaluate the effectiveness of different counseling tools and the impact of offering borrowers more frequent information and guidance beyond the statutorily required one-time entrance and one-time exit counseling.

·         Leveraging Research to Drive Better Student Outcomes. The Department of Education will pilot Advancing Insights through Data (AID), a research partnership program that will offer other federal agencies and affiliated researchers data access to conduct research that can inform and advance policies and practices that support students’ postsecondary success and strengthen repayment outcomes for borrowers. Starting with Federal Reserve Board researchers this fall, the program will allow experts to apply to securely access and match administrative student aid data files with other survey and administrative data, while ensuring safeguards are in place to protect the privacy of students and families. AID builds on the Administration’s recent efforts to leverage government data in ways that can improve service delivery, promote transparency, and strengthen accountability, particularly through the College Scorecard, which includes the most comprehensive, reliable data ever published on students’ post-college earnings and repayment outcomes. The Department is also exploring future opportunities for new research partnerships.

·         Modernizing Credit Reporting for Student Loans To Ensure Fair Treatment Of Borrowers. The Department of Education and the Department of the Treasury, in consultation with the CFPB, are working collaboratively with the credit reporting industry to develop guidance for servicers, lenders, and others who furnish data to the credit bureaus to determine how best to report student loan data so that it is fair, consistent, and accurately reflects repayment activity. This effort is another critical part of the Department’s new vision for servicing student loans.

·         Over 40 new student debt challenge takers. Earlier this month, the White House issued a call to action for colleges, universities, non-profits, businesses, state and local governments, and other employers to help more borrowers better understand their options, and to take action to enroll those borrowers in PAYE and related plans so they can manage their monthly payments and avoid delinquency and default. Today, we are highlighting a growing list of commitments from organizations working to inform their employees and members about PAYE and related plans, train human resources (HR) staff on the importance of helping borrowers understand their student loan repayment options and the steps individuals must take to enroll, and use digital platforms to highlight PAYE and related plans. In the few short weeks since the Debt Challenge was launched, there have been over 40 commitment makers, and we are encouraging more colleges, businesses, non-profits to take action. As of April 26, the list of commitments includes:

o   ACCESS College Foundation

o   AFSCME

o   Achieving the Dream

o   American Student Assistance

o   American Sustainable Business Council

o   California State University, Long Beach

o   California Association of Nonprofits

o   The Century Foundation

o   College Advising Corps

o   College Forward

o   College Greenlight

o   Dyersburg State Community College

o   Florida International University

o   Friendship Public Charter School

o   Indiana University

o   Iowa State University

o   Jobs for the Future

o   Lake Area Technical Institute

o   Lone Star College

o   Marcus Foster Education Institute

o   Marks and Associates

o   Montana State University Bozeman

o   Morgan State University

o   National Housing Resource Center

o   Natixis Global Asset Management

o   New Haven Promise

o   Operation HOPE, Inc.

o   Parkway School District

o   Pharr-San Juan-Alamo Independent School District

o   Rutgers University – Newark

o   Tennessee Technological University

o   University of Pittsburgh

o   University of Memphis

o   University of South Carolina School of Medicine Greenville

o   The Institute for College Access and Success

o   The State University of New York

o   University of Michigan – Ann Arbor

o   University of Northern Iowa

o   United Tribes Technical College

o   Valencia College

o   Young Invincibles

In addition, several organizations are committing to take additional action:

·         Civic Nation, in partnership with the digital agency, HUGE, has expanded their Up Next guidance and reminder tool to include information about income driven repayment options. Up Next will send text notifications to individuals who sign up to remind them about their loan repayment options and to provide guidance on how to sign up for different repayment plans.

·         College Forward will coach 6,000 plus motivated, underserved students to achieve the benefits of higher education and a college degree. They will educate the students they serve about the benefits of loan repayment options like PAYE and refer them to the resources available at financialaidtoolkit.ed.gov. College Forward will also recruit 80 plus recent college graduates through the AmeriCorps program to serve as mentors within their program.

·         Fidelity Investments has taken action to support employees with student debt and is piloting new solutions to better educate and empower student borrowers. This January, Fidelity Investments® announced a new employee benefit called the Step Ahead Student Loan assistance program, which provides eligible employees with more than six months of tenure $2,000 dollars per year toward their student loans (up to $10,000 dollars) and since its launch has enrolled 5,000 Fidelity associates who are receiving payments – saving a total of $1.5 million in interest and principal in the first month alone. Building on this work, Fidelity will pilot programs to better educate borrowers by aggregating all their loans in one place, show the best strategies to pay them down; educate borrowers on various repayment options including PSLF (Public Service Loan Forgiveness); and frame student loans in the context of other financial priorities, such as retirement.

·         Houston Community College (HCC) will use its team of financial coaches to hold workshops and one-on-one financial coaching sessions for current students and borrowers who have completed or left college to assist them with understanding student loan repayment options and help guide the students with taking advantage of the repayment options such as PAYE. HCC will also work to support student loan repayment on campus and in the local community through outreach to employees, parents, and community members.

·         National Housing Resource Center (NHRC) will train 500 housing counselors to help student loan borrowers qualify for income-driven repayment plans, by conducting a national training program for nonprofit housing counselors. The housing counselors will be able to work with their prepurchase, loss mitigation, and financial assistance clients and help them identify the appropriate plan.

·         Nerd Wallet pledges to promote the use of income-driven repayment options when appropriate to the three million consumers that use their website monthly to make and manage financial decisions. Through easy-to-follow articles and free tools, NerdWallet breaks downs the basics of the plans, who they’re best for and how to enroll in them to ease the burden of student loan debt.

·         Rite Aid commits to inform and assist their 90,000 associates, including 12,000 pharmacists, with strong financial planning support, including ensuring awareness of programs, like Pay-As-You-Earn (PAYE). Rite Aid will inform their employees of their ability to enroll in PAYE through their pay stubs twice a year, link to the PAYE website on their internal communications portal where their associates can access information about the program, and include messaging about financial assistance programs, like PAYE, in their company’s human resources newsletters and communications.

·         Student Debt Crisis will continue their student loan education by conducting student loan trainings for more than 2,000 professionals through the National Housing Resource Center. They will also work with CalNonprofits to help them build out a student debt program educating between 400 and 1,000 nonprofit professionals about repayment options and public service loan forgiveness who can help spread the word. Student Debt Crisis plans to conduct a series of webinars to reach more than 800,000 people within their membership network.

·         The Center for American Progress, working in partnership with Generation Progress and Higher Ed, Not Debt, has educated their employees about the benefits of these programs for the last two years.  As part of the challenge they will educate, engage, and mobilize Americans – including their own employees – around the issue of income-driven repayment plans, beginning on $1T Day, the national day which marks student debt surpassing one trillion dollars. These efforts will include social media chats and in-person events, starting with a D.C. event with policy experts. Additionally, CAP, GP, and HEND will work with partner organizations to host webinars and workshops. Altogether, these efforts can reach 5,000 people.

·         The Institute for College Access and Success (TICAS) will contact the more than 100,000 subscribers to their website, share information with their social media networks to remind them about income-driven repayment plans and encourage them to help spread the word to others.

·         The State University of New York has committed to spreading the word to their nearly 1.4 million students and employees about income driven repayment options through regular information sharing, debt management counseling for at risk students, and through their new SUNY Re-Enroll to Complete program which encourages recently withdrawn students to return and finish their degrees.

·         The University of California commits to regularly informing its more than 246,000 students and 200,000 faculty and staff about income driven repayment options and public service loan forgiveness through its regular contacts, as well as by sending additional information to the main campus alumni relations offices, student services staff, and the system’s human resources professionals.

·         YI Advisors, the social impact arm of Young Invincibles, commits to piloting a new technology platform to help students and borrowers 1) better understand their student loan debt; 2) compare government repayment options including PAYE, and other plans; 3) get reminders about recertification and application deadlines; and 4) get help enrolling in PAYE and other income-driven repayment plans and programs like Public Service Loan Forgiveness that are currently under-utilized. They will work with a range of partners (from schools to non-profits to private sector) to distribute and pilot the student loan education platform with borrowers and identify areas for improvement.

In the coming weeks and months, the White House will continue to encourage organizations to take the Student Debt Challenge, and will announce additional challenge-takers. New Federal Commitments to Tackle Student Debt include:

·         The Corporation for National and Community Service (CNCS) will share information with current AmeriCorps members, AmeriCorps alums, and grantees about income-based repayment options, such PAYE. CNCS will also ensure that more members and grantees have information about other ways to reduce their student loan burden, including Public Service Loan Forgiveness. CNCS will also continue to encourage colleges and universities to match the Segal AmeriCorps Education Award that members receive at the end of their term of service. This year, approximately 75,000 AmeriCorps members are serving with thousands of organizations across the country, and more than 980,000 AmeriCorps members have served over the last 20 years. Since the inception of AmeriCorps in 1994, AmeriCorps members have earned more than $3.1 billion in education awards to pursue further education or pay off their student debt. In addition, CNCS has made more than $93 million in interest forbearance payments covering the interest cost of students loans for AmeriCorps members during their terms of service.

·         Honoring Our Federal Workforce. The US Office of Personnel Management (OPM) will coordinate an interagency effort to provide the federal workforce access to the information necessary to use one of the four income-based student loan programs and Public Service Loan Forgiveness options in order to reduce their family’s student loan debt. Through the remainder of the Administration, OPM will collaborate with human capital professionals and senior leaders across agencies to develop effective strategies for communicating the options available to the federal workforce. These strategies will be woven through OPM’s existing efforts to encourage and advance Hiring Excellence and enhance employee engagement in order to recruit and retain a first class federal workforce.

·         Streamlining Systems So More Students Can Access Financial Aid Resources. The United States Digital Service (USDS), working with the U.S. Department of Education Federal Student Aid Office (FSA) will review and streamline the process of creating an FSA ID – which is the new financial aid username and password – so students can complete the FAFSAs and so borrowers can log to manage their student loans, through a more secure and protected system. USDS and FSA will also simplify the income-driven repayment plan application process so that it is simple for borrowers to enroll to manage their debt using an income-driven repayment plan. Part of this work will be to establish a centralized point of access for all federal student loan borrowers, starting with the needs of the borrower. Finally, USDS and FSA will digitize the process of applying for Public Service Loan Forgiveness so that teachers, firefighters, people serving their communities through non-profits, and others who are eligible for Public Service Loan Forgiveness do not struggle with paper processes to have their loans forgiven.

Building on a Record of Progress

Americans with student loan debt deserve high-quality customer service and the consumer protections necessary to ensure they can effectively take action on their student debt. Over the past few years the Administration has stepped up efforts to ensure that there are options available to support Americans who may be struggling with student loan debt.

·         Making College More Affordable and Keeping Student Debt Manageable. Since the President took office, the Administration has increased the maximum Pell award by over $1,000, and for the first time, tied aid to inflation to maintain its value. These efforts have cut the cost of college by about $3,700 on average for over eight million students last year. This Administration also established the American Opportunity Tax Credit (AOTC), which provides up to $10,000 over four years of college, which will help nearly 10 million families cover the costs of tuition and other educational expenses, saving on average $1,800 in 2016. To ensure student loans are manageable, the Administration has cut student loan interest rates, saving a typical student $1,000 over the life of loans borrowed this year, and began implementing the Student Aid Bill of Rights to strengthen loan servicing and make it easier for students to access the information they need to choose repayment plans. Meanwhile, defaults, delinquencies, and forbearances are trending downwards.

o   Accomplishments on the Student Aid Bill of Rights. Since the President’s announcement of the Student Aid Bill of Rights in March 2015, the Department of Education, in collaboration with other federal agencies, has worked to:

§  Identify Best Practices in Performance-Based Contracting including identifying a strong performance-based compensation structure focused on supporting borrowers with the greatest risk of default; setting performance metrics and allocation methodology to drive strong borrower outcomes; requiring standardized service-level minimums including standardized communications focused on risky borrowers; creating robust borrower protection and complaint resolution processes to ensure strong accountability; and establishing strong oversight processes and enforcement mechanisms including penalties for noncompliance or contract violations.

§  Protect Social Security Benefits for Borrowers with Disabilities through a new process to proactively identify and assist federal student loan borrowers with disabilities who may be eligible for Total and Permanent Disability (TPD) loan discharge.  Approximately 387,000 borrowers were positively identified in the first set of matches, which were conducted in December 2015 and March 2016. In total, these borrowers have a combined loan balance of over $7.7 billion, and roughly 179,000 are currently in default. As required by federal law, over 100,000 of those borrowers with defaulted loans have been certified for the Treasury Offset Program, and are therefore at risk of losing federal tax refunds, and of having their Social Security benefits offset. This month, borrowers who were positively identified in the match will receive a customized letter explaining that the borrower is eligible for loan forgiveness and the simple steps needed to receive a discharge. Unlike other borrowers, those identified through the data match will not be required to submit additional documentation of their eligibility. Instead, they are eligible for a streamlined process by which they simply sign and return the completed application.

§  Find New and Better Ways to Communicate With Borrowers by conducting five pilots to test the most effective ways to share information about loan repayment options with borrowers. These pilots reached over four million borrowers this past year and will reach an additional three million by the end of the summer. The Department of Education collaborated with the White House Social and Behavioral Sciences Team to utilize research and behavioral insights about how borrowers consume information, consider their options, and make decisions about repayment. Randomized-controlled trials were used to test the effects of how choices are framed and the importance of personalized information. These insights are being used to inform a new repayment campaign to reach over a million borrowers in their grace period that are about to enter repayment.  Building on these successful pilots, the Department of Education is making plans to standardize communications about loan servicing so that information received is accurate, personalized and consistent, ensuring that borrowers receive the information that they need to successfully repay their loans.

§  Create a Responsive Student Feedback System to give students and borrowers a simple and straightforward way to file complaints and provide feedback about federal loan lenders, servicers, collections agencies, and institutions of higher education.  Beginning on July 1, 2016, the Enterprise Complaint System (ECS) will enable customers to submit complaints, positive feedback, and allegations of suspicious activity regarding their Federal aid experience directly to the Department of Education and receive responsive, meaningful resolutions. Customers will be able to view, track, and manage their cases through an easy-to-use online portal or by calling a dedicated support center. In addition, the data collected by the Department will be analyzed and used to drive enhancements to internal student aid operations and inform policy discussion on relevant topics.

§  Strengthen the Student Loan System to Better Protect All Borrowers through a report released last October, in consultation with the Department of the Treasury and CFPB, the report outlined a series of statutory, regulatory and administrative recommendations to safeguard student borrowers including calling on Congress to simplify income-driven repayment plans; ensuring service members don’t lose their interest rate protections under the Servicemember Civil Relief Act when consolidating their loans; strengthening protections against predatory third parties that charge borrowers exorbitant fees for services that are available for free at studentaid.gov and enhancing federal data-sharing to improve borrower experiences and simplify the application process for borrowers’ to re-certify eligibility for income-driven repayment over multiple years.

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What is #1TDay? America’s Student Debt Crisis http://studentdebtcrisis.org/4678-2/ Mon, 25 Apr 2016 15:25:47 +0000 http://studentdebtcrisis.org/?p=4678 Federal student loan repayment options are always free and you should NEVER pay for help.  Today, “1-TDay” marks the fourth anniversary since student loan debt hit one trillion dollars. Since then, we have added nearly four-hundred billion dollars to the overall total and there’s no end in sight. If student debt is stressing you out […]

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Federal student loan repayment options are always free and you should NEVER pay for help. 

Today, “1-TDay” marks the fourth anniversary since student loan debt hit one trillion dollars. Since then, we have added nearly four-hundred billion dollars to the overall total and there’s no end in sight. If student debt is stressing you out – you are not alone. Veterans, students, parents and even retirees are feeling the pressure of their student loans and nearly half are struggling to make monthly payments. This is why Student Debt Crisis is co-hosting two events this week aimed at helping borrowers better understand federal student loan repayment options. While we fight for better reforms and combat the fraud and abuse from student loan servicers, we want to make sure you have all of the tools necessary to repay your student loan debt. 

It is important for us to understand what life is like for student loan borrowers. Sure, some of us have it easy and our monthly payments are minimal, however, 8 million people are in default which means their lives have been turned upside down due to their student loans.  
Help support our efforts to educate student loan borrowers. Donate $5 today.Click here to DONATE                

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AFL-CIO and Student Debt Crisis to Hold Second Annual Student Debt Hotline http://studentdebtcrisis.org/afl-cio-and-student-debt-crisis-to-hold-second-annual-student-debt-hotline/ Mon, 25 Apr 2016 12:40:50 +0000 http://studentdebtcrisis.org/?p=4672 Media Advisory for April 25, 2016                                                      Contact: Natalia Abrams,  (310)-365-1069 AFL-CIO and Student Debt Crisis to Hold Second Annual Student Debt Hotline On Monday, April 25th, Student Debt Crisis […]

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Media Advisory for April 25, 2016                                                      Contact: Natalia Abrams,  (310)-365-1069

AFL-CIO and Student Debt Crisis to Hold Second Annual Student Debt Hotline

On Monday, April 25th, Student Debt Crisis will host a Twitter Town Hall to mark the fourth anniversary since student loan debt hit $1 trillion in 2012. The average college graduate has $35,000 in student loan debt, and as that cost continuous to increase, the AFL-CIO is standing with Student Debt Crisis and other allied organizations to ensure borrowers are informed about their debt-relief options.

Following the town hall, the AFL-CIO and Student Debt Crisis will host the second annual student debt hotline from May 24th – 26th to offer debt relief solutions to borrowers.


WHAT: Student Debt Crisis Twitter Town Hall

WHEN: April 25th at 11:30am EST

WHO: Student Debt Crisis – @DebtCrisisOrg

AFL-CIO – @AFLCIO

Higher Ed, Not Debt – @HigherEdNotDebt

Generation Progress – @GenProgress

One Wisconsin Now – @StudentLoanVote

NerdWallet – @NerdWallet

Student Loan Attorney’s

Jay Fleischman – @JayFleischman

Joshua Cohen – @StudentLoanLaw

 

*To join the Twitter chat, ask questions using

#StudentDebtHotline from 11:30am-12:30pm EST on April 25th. 

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