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Banks wrote off $3 billion of student loan debt in the first two months of 2013, up more than 36 percent from the year-ago period, as many graduates remain jobless, underemployed or cash-strapped in a slow U.S. economic recovery, an Equifax study showed, Reuters reports. The credit reporting agency also said Monday that student lending has grown from last year because more people are going back to school and the cost of higher education has risen.
“Continued weakness in labor markets is limiting work options once people graduate or quit their programs, leading to a steady rise in delinquencies and loan write-offs,” Equifax Chief Economist Amy Crews Cutts said in a statement.
Equifax analyzes data from more than 500 million consumers to track financial trends……Read More
For-profit schools are opposing what they argue is a “retroactive” crackdown on student loan defaults, and said on Thursday that they may challenge the U.S. Education Department in court, reports Reuters. The fight over whether the department can look at default data of students who left school three years ago is the latest twist in a larger battle over new rules aimed at cracking down on tuition loan abuses and ensuring courses lead to gainful employment. A preliminary rule says programs at for-profit schools could lose their eligibility for student loan funding if 65 percent of students default or are shown to be unable to pay their loans. Losing federal aid could cripple some for-profit schools. The Education Department opted to use default data from students who left the programs in previous years. The rule–which is not yet final–is slated to go into effect in mid-2012……Read More
Congressional Democrats on March 18 trimmed their original student loan plans, reduced spending for community colleges, and eliminated early childhood money from a broad rewrite of a college aid bill piggybacked on to fast-track health care legislation.
The student loan measure would be the biggest change in college assistance programs since Congress created them in the 1960s, ending a private-lender program by having the government originate all loans to needy students.
But facing savings smaller than anticipated from the switch and a shortfall in Pell Grant money for low-income students, Democrats are proposing no increases in over the next two years and a modest increase over the five years that follow.…Read More
Paul Goulet hopes Connecticut will help him get from under nearly $8,000 he’s borrowed for college after losing his job in a paper manufacturing plant. Goulet, 55, is a student in environmental studies at Goodwin College, aiming to find work in wastewater treatment. State legislation that would waive thousands of dollars in loans would benefit him and other students who earn degrees or certificates in green technology and other jobs, reports the Associated Press. Loan forgiveness programs aren’t new—states use them to entice medical professionals to rural areas, steer teachers to certain subject areas, and attract farmers to local agriculture. But Connecticut’s proposal could break new ground. Trying to boost its work force in high-growth green technology, the state would annually forgive as much as $2,500 of federal and state education loans for up to four years, or 5 percent of loans, whichever is less. The legislation comes as the White House is emphasizing the importance of green works and job creation. President Barack Obama announced in January $2.3 billion in tax credits, to be paid for from last year’s $787 billion stimulus package, that he said would create 17,000 green jobs……Read More
Over the past decade and a half, the internet has made it easier for families to learn about, find, and apply for college scholarships, government grants, and other types of student financial aid. This transformation of the financial aid industry continues even today with a simplified federal aid form and a new XML data standard that will make applying for scholarships easier than ever.
I have acted as a catalyst for some of these major developments and have a unique perspective on the role of the internet in paying for college.
I founded the FinAid web site in the early 1990s to help people plan for and pay for college by making the process easier to understand and more efficient. FinAid was one of the internet’s first web sites, not just one of the first web sites about student financial aid. It is also one of the oldest web sites still in existence.…Read More
Education Secretary Arne Duncan on Tuesday urged the Senate to overhaul student lending, asserting that the banking industry has had “a free ride from taxpayers for too long” and that executives with lending giant Sallie Mae have enriched themselves as borrowers rack up college debt, reports the Washington Post.
“Working Americans pay while bankers get rich,” Duncan said in a prepared statement. “Sallie Mae executives have paid themselves hundreds of millions of dollars in the last decade while teachers, nurses, and scientists — the backbone of the new economy — face crushing debt because of runaway college tuition costs.”
Duncan’s unusually pointed critique marked an escalation in the student loan debate as the Obama administration seeks to end a program that uses private lenders as middlemen for federally backed loans. The tone of the comments echoed President Obama’s recent populist rhetoric about the need to expand regulation of Wall Street……Read More
Four months ago, it appeared all but certain that the White House and Democrats in Congress would succeed in overhauling the student loan business and ending government subsidies to private lenders. But an aggressive lobbying campaign by the nation’s biggest lenders has now put one of President Obama’s signature plans in peril, reports the New York Times, with lenders using sit-downs with lawmakers, town-hall-style meetings, and petition drives to plead their case and stay in business. Obama called the idea a “no-brainer” last fall, predicting it would take billions of dollars from the profits of private lenders and give it directly to students, and many colleges already have moved to get loans directly from the federal government in anticipation of the next move by Congress. But House and Senate aides say that the administration’s plan faces a far tougher fight than it did last fall, when the House passed its version of the bill. The fierce attacks from the lending industry, the Massachusetts election that cost the Democrats their filibuster-proof majority in the Senate, and the fight over a health-care bill have all damaged the chances for the student loan measure, said the aides, who spoke on the condition of anonymity. But they said the administration had recognized the threat and was beginning to push back in an effort to get the plan approved……Read More