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The Consumer Financial Protection Bureau recently floated the idea of allowing private student loans to be wiped out in bankruptcy. Despite the objections of some (such as the Wall Street Journal) this is a good idea. Private student loans should be dischargeable in bankruptcy, while federal student loans should not be. To see why, it helps to take a step back and think about lending in generalContinue Reading »
Quick Hits is a short compilation of question-raising news stories, blog posts, and video clips that Education Sector team members are reading and viewing each day.Can one teacher make a difference? (The Line) Haven’t had enough of the World Cup? Then check out this US-vs-the-world infographic. (Continue Reading »
Last week, Student Loan Xpress, a company at the forefront of the federal student loan scandals in 2007, announced that it would forgive $112.8 million worth of private student loans it made for students to attend an unaccredited flight training school based in Nevada. The school, which charged $70,000 a year for tuition, shut down without warning in February of 2008, leaving borrowers with mouContinue Reading »
Andrew Gillen over at the Center for College Affordability and Productivity challenges my post yesterday on how PLUS loan denials could be used as a tactic for driving some borrowers toward private loans.
One of the certainly pertinent questions that Gillen raises is why would a lender deny a borrower’s PLUS loan application if they then run the risk of having that borrower go elseContinue Reading »
For many families, PLUS loans are an important source of borrowing to pay for expenses not covered by a Stafford loan. With basically no limit—parents can take out an amount equal to the cost of attendance minus any aid received—and a fixed interest rate of 7.9 percent or 8.5 percent depending on the program borrowed through, PLUS loans are almost always a better option than privateContinue Reading »
One of the stranger arguments being floated against reforming the federal student loan program is that ending subsidies for bank-based institutions will cause a collapse in the offering of private student loans that do not carry a government guarantee. But barring a massive reduction in tuition nationwide, private loan borrowing (unfortunately) appears to be alive and well.
A report releContinue Reading »
There are few higher education access issues the proposed reforms to the Perkins Loan Program (pages 64 to 88) aren’t trying to target. Tamping down excessive college costs? Schools get rewarded for low tuition. Need to improve graduation rates for low-income students? Institutions receive money for graduating large numbers of Pell Grant students. But the proposed Perkins loan reforms do ignoreContinue Reading »
While cost and increased aid for low-income students have rightfully dominated the discussion of the proposal to end subsidies for private lenders making federal student loans, it’s worth remembering that terminating the bank-based system would also help return integrity to a system with an ever-growing history of scandal and abuse.
Case in point, an audit report released Monday byContinue Reading »
Last Friday, FastWeb, a free, online scholarship search service, released the results of a survey it conducted on student borrowing, showing that half of students applying for private loans, parent PLUS loans, and home equity loans were denied access to funds. If this number is accurate, it means that a large number of students will need to adjust their college choices–from a private to aContinue Reading »
Robert Shireman, President of The Institute for College Access and Success, is guest blogging over at New America Foundation—check out his post today on how private student loans (not the government-backed loans) can’t be eliminated in bankruptcy.
Bankruptcy allows people who have serious financial problems a chance to start over by relieving them of most of their debt and preventing creContinue Reading »