Student Loan Debt, Equity, and Forgiveness

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First of all, thank you for the very warm welcome of this new blog. As soon as I posted the first message, I caught COVID, and now, two weeks later, I’m working my way through emails, tweets, and LinkedIn messages. Thanks and I’m catching up!

On May 16, I participated in the May public policy pop-up at the American Council on Education, The Policy and Politics of Student Loan Forgiveness, with Terry Hartle and Jon Fansworth. I try to attend these monthly sessions when possible and often recommend them to my students.

I started my higher education career in a financial aid office and was in charge of loans, specifically loan collection. That was over 30 years ago. I started by managing the institution’s Perkins loan program, then took over Stafford, PLUS and private loans for families. In this role, I was the main liaison with the collection agencies and it was brutal. I also organized graduation interviews with students and eventually created budgeting workshops. This early start in financial aid has framed my approach to my work ever since. While we have made many improvements to loan servicing and repayment, student debt has become crippling for so many of our young people.

Terry and Jon did a great job setting the stage for their session on student loan forgiveness. They pointed out that there are currently seven federal student loan programs, 16 repayment options and about 45 million borrowers involved. It’s a lot to take in. It’s complicated and it seems that the easiest political solutions to implement are also politically more tense.

The same Monday as the ACE policy popup, Morning email from Tom Harnisch included no less than 8 links to reports and mainstream press articles and editorials on student loans. The first link was to a NASFAA report – Protect borrowers and grow equity. The titles of some articles are revealing:

  • Biden dives into risky student loan debt politics The Washington Post (Publish date: May 16, 2022)

  • Op-ed: Student debt is crushing. Canceling it for everyone is always a bad idea. The New York Times (Publish date: May 14, 2022)

  • Student borrowers do not deserve “pardon”. They deserve an apology. The New York Times (Publish date: May 13, 2022)

For those who have time to peruse the recommendations, I recommend the NASFAA report. It focuses on three main areas: student loan servicing, student loan repayment, and student loan default. If that’s your thing, it’s definitely worth a read.

The report points to $1.6 trillion in outstanding student loan debt and, echoing a recurring theme, that this is a “symptom” of a broken system. Solutions require a systems approach and from what Terry and Jon were saying, it seems that the more streamlined the approach, the more political it becomes. One approach could be to “forgive” up to 10,000 for each borrower (undergraduate and graduate) with a household income below 125,000 and it looks like this could become a reality sooner rather than later. This morning’s Inside Higher Ed has the latest here.

In my two-plus weeks of COVID haze, I feel like student loan commentary has multiplied exponentially. I would direct people to this fantastic article in the NY Times by my sociologist sister, Tressie McMillan Cottom, America has turned the greatest vehicle for social mobility into a debt machine. And then there’s a study highlighted in AERA Open that takes an equity lens to loan repayment behavior -.Like Any Other Pitfall: The Backdoor to Student Loan Repayment. The authors studied student loan repayment patterns and identified five types of loan repayment: persistent defaulters, perpetual payers, prompt full payers, late full payers, and consolidators. They also disaggregated data by borrower race/ethnicity, social class, and institutional sector to analyze borrower stratification.

Readers, what do you think of the student loan cancellation policy? Who should I interview on this topic for a future blog post?

Mary Churchill is the former Chief of Policy and Planning for Mayor Kim Janey of the City of Boston and current Associate Dean for Strategic Initiatives and Community Engagement and Director of the Higher Education Administration Program at Wheelock Boston University College of Education and Human Development. She is co-author of When Colleges Close: Leading in a Time of Crisis. She is on Twitter @mary_churchill and can be reached by email at [email protected]

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