A report issued Tuesday by Education Sector, a Washington, D.C. think tank, examines the federal government's three-year cohort default rate for federal student loans as well as alternative ways to measure how many students fail to repay their debt. The report, "In Debt and In the Dark," argues that current publicly available information on loan defaults is incomplete and doesn't represent students' total risk of default. The author, Andrew Gillen, research director of Education Sector, calls for combining default rates with graduation rates — saying that graduation rates that exceed default rates, found at 514 colleges, the majority of which are community colleges, are a "red flag" for prospective students.
Arizona has sued the Maricopa Community College District, seeking to block it from granting in-state tuition rates to students who lack the legal authority to live permanently in the United States who qualify under President Obama's executive order for work permits, the Associated Press reported. The suit claims that the district is violating Arizona law barring any benefits for immigrants who are not legally entitled to stay in the United States. But Maricopa officials said that President Obama's executive order in fact does give these immigrants legal status.
More than half of all student loan borrowers are concerned they will be unable to repay their debt, according to a paper released today by the Urban Institute, a Washington think tank, using data from the 2012 National Financial Capability survey. The report found that 57 percent of all student loan debtors are concerned about repayment, and 9 percent of student loan borrowers never attended college at all — either because they borrowed for vocational certificates or because they borrowed on behalf of family members.
WASHINGTON — With less than a week remaining until the interest rate on new, federally subsidized student loans is scheduled to double to 6.8 percent, President Obama will take borrowers' questions about student loans via text message, the White House announced Monday. Obama will pick one question to answer per day.
WASHINGTON -- With 10 days remaining until the interest rate doubles on new, federally subsidized student loans July 1, a bipartisan group of senators is said to be working out a compromise -- but whether a bill that can pass both houses of Congress is achievable before the rates increase is still unclear. The compromise would base interest rates on the 10-year Treasury note (as would plans from Senate and House Republicans and from President Obama). Rates would vary from year to year for new loans, but would be fixed over the life of the loan -- as was the case in Obama's plan, and in the Senate Republican proposal. The plan would cap interest rates at 8.5 percent.
It's unclear whether the plan will catch on broadly among Senate Democrats, who have resisted shifting to a market-based rate and instead advocated for a one- or two-year extension of the 3.4 percent rate so that Congress can tackle the issue when it reauthorizes the Higher Education Act, which expires at the end of next year.
WASHINGTON -- Education Secretary Arne Duncan told members of the Senate Budget Committee on Tuesday that he was "hopeful" a deal could be reached to prevent the interest rate on new federally subsidized student loans from doubling in less than two weeks. The hearing was on the administration's budget request for the 2014 fiscal year, which included a plan to switch to a market-based interest rate. Some Democratic senators expressed skepticism about the plan, saying they don't want rates to increase above current levels, while Republicans said their plan -- introduced before the administration's budget request -- was very similar to the president's. "I think there are some differences, but I think they're resolvable," Duncan said. "I am very hopeful that this can get done."
In a letter to the Consumer Financial Protection Bureau on Monday, consumer advocacy groups, higher education associations and others asked the bureau to require that colleges give prior approval before students borrow private loans, saying that the bureau has the power to require full certification by institutions. Right now, students "self-certify," meaning they sign off on a form that includes information about federal student loans and other forms of financial aid. Requiring colleges to certify that they are aware of the loans, the groups argued, would help ensure that students have already maxed out their federal loan options (many private loan borrowers have not), because federal loans usually offer lower interest rates and more flexible repayment options than private loans.