For many of us (myself included), student loans were the only way to get through college-along with menial jobs on campus and seasonal summer employment. We borrowed what we could with the promise to pay it back-one payment at a time. Many of us also remember the payment books that arrived in the mail the day after graduation. Every time you made a payment, you ripped out a stub and sent it with the check. Finishing a payment book felt really good – until the next book arrived in the mail.
The cost of attending a four year college has skyrocketed, while loans available to students are shrinking. The proposed budget from the Department of Education (ED) will cut loan subsidies for low-income students essentially making it more expensive for students borrow money for college. According to CNN Money, if approved, this budget would also slash the number of Work Study jobs for college students in half. And 2.9 million fewer low-income students would receive subsidized loans. More than 6.9 million borrowers received a subsidized loan this year, for a total of $22.6 billion.
Next year, the Trump budget proposes shifting some money toward unsubsidized loans, which will accrue interest while students are still in school (the one thing we had going for us is the interest didn’t begin to accrue until after graduation). DeVos also reversed a policy preventing student loan debt collectors from charging sky-high fees to students desperately trying to catch up on their student loans” (CNN).
There is some history (and contentiousness) behind federal student loan programs in the department. During the Obama administration, Congress gave ED control of the federal student loan program, with the intent to remove the middlemen from the program and eliminate profits that private banks skimmed off the system. But now, years after the transition, the department seems to want to ignore the original intent of the change and instead administer a trillion-dollar loan program for the financial benefit of everyone except the students (CNN). “By one estimate, the federal student loan program turned a profit of $1.6 billion in 2016”, according to the Congressional Budget Office (CNN Money).
In April, DeVos rolled back the Obama administration’s attempt to reform how student loan servicers collect debt. Navient is one of the largest corporations that services and collects on student loans. The withdrawal of the Obama administration guidelines could make Navient a likely contender for a government contract, which will renew in 2019. Navient shares moved higher after the government released DeVos’s decision (Bloomberg). This corporation is also not without its own controversy.
Elizabeth Warren (D-MA) recently cited a story of Navient, “When the Department failed to hold giant student loan servicer Navient accountable after the company was fined nearly $100 million by other federal law enforcement agencies for allegedly overcharging thousands of active-duty military personnel, I called them out and helped trigger an independent investigation. Those efforts ultimately helped push the Secretary of Education to begin refunding money to over 80,000 military borrowers and to commit to a complete overhaul of the federal contracts with student loan servicers” (CNN).
Navient is still in the news. According to Bloomberg, “in January, state attorneys general in Illinois and Washington, along with the U.S. Consumer Financial Protection Bureau, sued Navient over allegations the company abused borrowers by taking shortcuts to boost its own bottom line. Navient has denied the allegations.”
The level of activism and accountability in government has increased since this administration took office in January. It’s so important to be informed. This week, Elizabeth Warren launched a new website called DeVos Watch. The site includes a video explaining why she launched the site, as well as what she hopes the outcome will be.
That’s why today I am announcing a new project to hold Secretary DeVos’ Department of Education accountable. DeVos Watch will seek information about the Department’s actions and inactions around federal student loans and grants and highlight the findings. People can also participate directly by tracking the Department’s actions, submitting oversight suggestions or filing whistleblower tips.
Accountability is about making government work for everyone. Regardless of political party, I’m hopeful that other policymakers will join me in efforts to hold the Department of Education accountable for serving our students — not the industries that make money off them. We all have an interest in a well-run, fiscally responsible, corruption-free student aid program that puts students first. That is Secretary DeVos’ job — and it is Congress’ job to make sure she does it.
There should be transparency in government, and I applaud Warren’s efforts to hold the ED publicly accountable for their decisions. I applaud her nonpartisan efforts to do what’s right for students seeking financial assistance to attend college. We should encourage a highly educated workforce. That so many bright smart, driven people cannot afford to go to college, and that so many more leave school with a mountain of debt is counterproductive.
HOW MUCH DOES IT COST?
For the 2014–15 academic year, the average annual price for undergraduate tuition, fees, room, and board was $16,188 at public institutions, $41,970 at private nonprofit institutions, and $23,372 at private for-profit institutions (NCES).
What do other countries do? Germany eliminated tuition because they believed that charging students $1,300 per year was discouraging Germans from going to college. Chile is doing the same. Finland, Norway, Sweden and many other countries around the world offer free college (source). Maybe this isn’t such a radical idea. But for now, we keep an eye on DeVos and the ED.
These are my reflections for today.