Recommendations for Using Repayment Rates

January 21, 2016

The federal government should hold colleges and universities accountable for whether their former students are able to successfully repay their loans, said a report released Wednesday by the Institute for Higher Education Policy.

The group, which advocates for low-income students in higher education, offers a series of recommendations for how policy makers should use loan repayment rates to set higher performance standards that colleges must meet as well as provide students and families with more consumer information about their prospective institutions.

The report calls on lawmakers to adopt repayment rates as a supplement to cohort default rates. It also recommends defining successful loan repayment as more than a $1 reduction in a borrower’s principal loan balance (which is how the Education Department currently calculates the rate).

The Obama administration released data last year showing, for the first time, the rate at which federal loan borrowers repay their debt at each college.

Senators Jeanne Shaheen of New Hampshire, a Democrat, and Orrin Hatch of Utah, a Republican, last year introduced legislation that would replace the federal government’s loan default rate standards for colleges with ones based on loan repayment rates.

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