| For the first time since the Higher Education Act was introduced nearly 50 years ago, U.S. student loan debt has surpassed $1 trillion.
Many students, parents and financial aid experts are worried about a looming student loan crisis. According to the Project on Student Debt, seven out of 10 students who graduated in 2013 had student loan debt, with an average of about $29,400 per borrower.
“I think the numbers part of it is really the key piece that people don’t always get,” said Felicia Gopaul, a certified financial planner and president of College Funding Resource. “You know, if you borrow $30,000, $50,000, whatever you’re borrowing, that is the number that you’re going to have to pay back.”
In response, U.S. lawmakers have drafted legislation aimed at reducing student debt, providing educational resources and increasing transparency.
One such measure is U.S. Sen. Tom Harkin’s 785-page draft reauthorizing the Higher Education Act.
The Iowa Democrat’s proposal, the Higher Education Affordability Act, includes several amendments to the current financial aid structure that would make it easier for students to pay for college.
Harkin’s plan aims to provide some relief for students by increasing state contributions to public universities, supporting community colleges and expanding programs that allow high school students to earn college credits.
The House of Representatives recently passed three bills as part of the reauthorization, including the Empowering Students Through Enhanced Financial Counseling Act, which requires institutions to provide more loan counseling resources for students.
But Gopaul and other experts say that while these bills are good efforts, they don’t do enough.
“They could go a little bit further with the process,” said Gopaul, referring to the Empowering Students Through Enhanced Financial Counseling Act. She noted that many students who had gone through current entrance and exit loan counseling did not seem to remember it.
Scott Weingold, a financial aid expert and co-founder of the College Planning Network, agreed that while the bill contains some helpful changes, it would likely not make a big impact. He said many students aren’t familiar with the basics of financial aid.
“I don’t think that it’s necessarily going to be a game-changer, per se, for making college more affordable for students,” he said, referring to Harkin’s comprehensive bill.
Even so, these proposals could offer students more resources and transparency than they had in the past by providing them with more funding and educational resources.
Helping students with debt
When President Lyndon Johnson signed the Higher Education Act into law in 1965, he hoped to make higher education more accessible by providing more financial aid to students. Today, as the act is awaiting reauthorization for the 10th time, lawmakers are trying to achieve that same goal on a much larger scale.
By educating students about the risks involved with borrowing, Harkin’s proposal would make it easier for students to stay informed about how much they owe, when they need to repay their debt and what they can do if they aren’t able to make a payment.
The amendments also support students with the biggest financial hardships by offering lower monthly payments, allowing private loans to be discharged in bankruptcy, establishing income-based repayment systems and making the collections process more consumer-friendly. |