The number of federal direct student loan borrowers who were enrolled in an income-based repayment program rose by 20 percent in the last three months of 2013, as the Education Department launched a large outreach campaign to get more people to use the benefit.
Slightly more than 1.3 million borrowers had loans in an income-based repayment plan at the end of last December, an increase of 210,000 from the end of September, according to recently released federal data.
The increased participation in the program occurred as the Obama administration in November and December sent emails directly to more than 3.5 million borrowers that it believed could benefit from enrolling in the plans, which cap loan payments at a percentage of a borrower’s discretionary income and forgive any outstanding balance after 20 or 25 years.
During the same period, the number of borrowers participating in the similar but less generous income-contingent program remained roughly the same at 580,000.
Despite efforts by the Obama administration to better publicize and ease the application process for the income-based repayment program, enrollment remains relatively low compared to the overall federal direct loan portfolio, which includes 11.7 million people who are currently actively repaying their federal direct loans. An additional 5.5 million are in deferment or forbearance, and another 2.4 million direct loan borrowers are in default.
The Education and Treasury Departments planned to announce on Friday another aspect of the administration's campaign to enroll more borrowers in the programs. TurboTax will display a banner on its website that links to the Education Department's "repayment estimator," which provides information on enrolling in the programs.
The government will also include, during the upcoming tax season, a message about federal student loan repayment options on the envelopes of tax refund checks mailed this year. About 25 million of those envelopes will be mailed to tax filers this year, the departments said.
The Education Department has again rescheduled its “technical symposium” on the Obama administration’s proposed college ratings system. The new date for the daylong, public meeting is February 6, according to an email sent Thursday to presenters.
Education Department officials, citing poor weather conditions in Washington, D.C., earlier this week postponed the event and set February 20 as the new date. But, according to emails to speakers, officials have since decided they want to hold the conference sooner.
The symposium will feature presentations from more than a dozen people with expertise in higher education data who will make presentations on various aspects of the department’s proposal to develop a ratings system.
A group of institutions that favor a competency-based approach to student learning have offered examples of the sorts of approaches they would try in a program the U.S. Education Department is contemplating to encourage such experimentation. The department in December issued an invitation to institutions to propose ways in which a waiver of certain federal financial aid rules, as part of an "experimental sites" program, might allow them to improve student outcomes, speed time to degree, and lower costs for students.
In their submission, the institutions -- which include a mix of traditional public and private institutions, online only institutions, and community college systems -- proposed "testing new or alternative federal definitions of attendance and satisfactory academic progress," "decoupling federal financial aid from time-based measures," and allowing federal aid to flow to a degree program that mixes competency- and credit-hour-based learning, among other approaches.
The institutions are: Alverno College, Antioch University, Brandman University, Broward Community College, Capella University, Cardinal Stritch University, Charter Oak State College, Council for Adult and Experiential Learning, Excelsior College, Kentucky Community and Technical College System, Lipscomb University, Northern Arizona University, Southern New Hampshire University, SUNY Empire State College, University of Maryland University College, the University of Wisconsin-Extension and Westminster College.
The federal government should create a matching grant program to reward states that maintain and increase their funding for public colleges, by linking the maximum Pell Grant awarded to students in states to per-student funding or higher education, the American Association of State Colleges and Universities argues in a new report. The paper documents the decline in states' funding per full-time equivalent college student since 2000 and the role that trend has played in driving up tuition prices (and student debt).
The report asserts that the federal government can influence state behavior, citing the maintenance of effort provisions that were inserted into the federal stimulus legislation (and other measures) that provided funds to states that kept their own spending on higher education above certain thresholds. Those efforts have not gone far enough, though, AASCU argues, by rewarding states that at least maintained their spending no matter whether their levels were high or low. "A new model is needed that acknowledges existing levels of per-student state support for public higher education and that strategically leverages federal dollars to incentivize additional state investment."
The association calls for a matching grant program of up to $15 billion a year, with grants to states based on how much money they provide per student compared to the Pell Grant maximum award. (A state's federal grant award would be cut if it reduced its spending on public university operating support.)
The proposed additional spending of billions a year may seem like an unlikely luxury in an era when members of Congress are bickering over millions, but AASCU suggests that funds for the program could be derived from "better gatekeeping of institutional eligibility to participate in federal student aid programs (particularly for for-profit colleges), and "risk sharing" for federal student loans.
Top Obama administration officials on Thursday held a meeting at the Treasury Department with more than a dozen financial institutions and loan servicing entities to discuss ways to improve the private student loan market. Education Secretary Arne Duncan, Consumer Financial Protection Bureau Director Richard Cordray and Acting Deputy Treasury Secretary Mary Miller were among the administration officials and government regulators who met with executives from the largest student lenders and servicers.
“Participants discussed strategies to assist borrowers in successfully managing their private student loans, including servicing best practices and approaches to private student loan modifications and refinancing,” according to the Treasury Department’s account of the closed-door meeting.
Miller urged the banks and loan servicing companies “to continue their efforts to expand options for repayment in the private student loan marketplace,” the department said. "Private student lenders and servicers can and should do more to offer more affordable repayment options so borrowers can avoid default," Cordray said in a statement after the meeting.
Cordray’s agency has been critical about some practices in the private student loan market. The CFPB previously raised concerns about problems with the servicing of private student loans, especially with regard to military service members. Starting in March, the bureau will begin more closely monitoring of the largest student loan servicing companies. Private lenders and loan servicers have also drawn scrutiny from consumer advocates and several members of Congress. A group of Senate Democrats is pushing legislation by Sen. Dick Durbin of Illinois that would increase regulation of private student loans and how companies service those loans.
Attending the meeting from the private student loan industry included executives from: Sallie Mae, Wells Fargo, JP Morgan Chase, RBS Citizens Financial, PNC Financial Services, CommonBond, SunTrust Banks, Discover Financial Services, American Education Services (also known as the Pennsylvania Higher Education Assistance Agency), Great Lakes Higher Education Corporation, and the Missouri Higher Education Loan Authority.