Do you know who Arne Duncan is? Unless you are a regular follower of politics, I would say probably not. If I told you he has been the U.S. Education Secretary for the last 6 years, I bet you might have something to say about his performance while in office. Duncan came to Washington with the goal to reform K-12 schooling, and has made positive changes to national test standards and teacher effectiveness, but I have no doubt that these accomplishments are not what he will be known for. While Duncan was in office, the total student debt in our country has doubled from “roughly $666 billion to nearly $1.3 trillion, according to the Federal Reserve.”
Duncan resigns in December but the student debt crisis in our country continues to grow. President Obama celebrates Duncan’s accomplishments but many Americans find it difficult to understand why the growing need for attention to our higher education system and among the 40 million Americans with student loan debt was not placed as a priority? As Arne Duncan steps down and John B. King Jr. takes his spot, here are 4 of the largest issues we hope to see King face.
1. We Can't Afford Repayment
Borrowers' average monthly payments are $681. 1 in 4 borrowers are unable to make payments at all, resulting in default. The average borrower is saddled with $29,000 in federal student loans, resulting in a 48 percent increase since Duncan took office. Duncan argued that the real problem is that less Americans are attending and graduating from college, resulting in America falling to #12 worldwide. What he fails to mention is that most of the countries ranking higher than the U.S. offer free access to higher education. Imagine our graduates walking away with little to no debt into fulfilling careers; it would be a complete game changer. Click here to learn more about careers that qualify for student loan forgiveness.
2. Student Loan Servicer Scandals
Our nation's largest private loan servicer, Navient, (the former Sallie Mae) is facing potential lawsuits following a May investigation by the Consumer Financial Protection Bureau. The Department of Education responded, demanding that Navient face the most serious penalties that have ever been handed out to a contractor of the DOE. The student loan giant, who works with over 12 million borrowers and whose motto is “Solutions for Your Success” faces allegations of overcharging, mischarging, even discriminating against active duty service members. Investigations found loan violations dating back to 2005! Navient is not the only loan servicer who has been cheating the system and the situation has been exascerbated by the poor monitoring of the Department of Education.
The truth of the matter is that both private lenders like Navient and government-backed federal lenders are making more money from defaults than loans that are in good standing. Between 2007 and 2012, the Department of Education made $66 billion in profit from loans in default. King has big shoes to fill here in setting up a system of checks and balances and reinstating the faith of the American people in their loan servicers. Duncan's biggest legacy in higher education may be that he dramatically increased the role of the U.S. Department of Education in the nation's schools with 93 percent of all new student loans going through the federal government. This plan, combined with more readily-available student loan forgiveness options would mark a step in the right direction.
3. For-Profit Refunds
For-profit education in the United States refers to higher education educational institutions operated by private, profit-seeking businesses. A lot of these online and job-placement schools are now under investigation and scrutiny from the Consumer Financial Protection Bureau, state attorney generals, and the U.S. Department of Education. The appeal of a for-profit education is to quickly and conveniently become equipped for a career in their chosen field. Instead, many of those enrolled found misleading information, excessive costs, programs that only provide training for low-wage jobs and in many cases, there were no jobs waiting for them after graduation. Now we are seeing thousands of Americans who borrowed money from the Department of Education to attend these schools fighting to cancel their debts on the grounds that “they were defrauded on the Education Department’s watch.”
One of the largest enemies in this debate is Corinthian Colleges, who has since then been shut down. While Duncan had attempted to bail out the chain before it declared bankruptcy, the Consumer Financial Protection Bureau stepped in and sued Corinthian for its false job placement and graduation rates. The fight against for-profit schools is still underway as the amount of loans students owe to the federal government is huge.
4. Increased Awareness About Federal Loan Forgiveness Programs
Only 15% of borrowers eligible for student loan forgiveness were enrolled in government-sponsored plans. There are over 33 million borrowers , (over a quarter of the U.S. workforce) who are currently eligible for enrollment in these programs that can lead to forgiveness. The U.S Department of Education has only notified 3.5 million of these borrowers about their eligibility!!! Why is this? The websites are hard to navigate, employers are under-educated and both federal and private lenders are projected to make billions off of student loans in the next 10 years. Do you know what it means to work in a “public service” job? It includes the armed forces, teachers, social workers, emergency services personnel, government workers as well as non-profits. At Student Debt USA we strive to spread the awareness of these student loan forgiveness programs.
Student debt has become the second-largest source of U.S. household debt in America. The national student loan debt is nearly $1.4 trillion and is expected to double by next year. Duncan’s largest arguments surrounding the student loan crisis were that we needed a larger focus on college completion than on higher debt levels. “Nearly half of borrowers said they had to cut spending because of their monthly student loan payments." The survey also found that borrowers with student debt were more likely to avoid medical treatment because they couldn't afford it.
King has a lot of work to do. America is worried. We are told that we need a degree to be successful but we cannot afford what it costs to get there. When we take out loans to pay for our education, we are met with less opportunity post-graduation, meaning we cannot begin to pay back what we owe. We can’t trust our loan servicers and aren’t being informed about the programs developed to relieve us of some of this financial burden. For whatever reason, Duncan didn’t make higher education his main focus. We can only hope that King will take a different approach. In one of Duncan’s most recent speeches, it is clear that he is not blind to the crisis he’s leaving in his wake, saying, “A spiral of cost and debt today threatens to take college, America’s engine of social mobility, and kick it into reverse.”
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