According to “Student Debt and the Class of 2015’” the latest report from the Project on Student Debt, about seven in 10 (68%) college seniors who graduated from public and private nonprofit colleges in 2015 had student loan debt. The average graduate owed $30,100, which is up 4% from the 2014 report. Almost one-fifth of the Class of 2015’s student debt was from private non-federal loans, which provide fewer consumer protections and repayment options and typically less favorable terms for the borrower than federal loans.
For-profit colleges were not included in the report because so few of those schools report their data. The report notes that for-profit colleges is where the debt is most troubling and that other data suggests these students have a higher debt load.
Suggestions for Reducing Student Debt
The report includes policy suggestions for reducing debt burdens to students on both the state and federal levels. On the state level, the report contends that the best way for states to reduce reliance on student debt is to increase investment in higher education. This includes providing need based grants to students. Another idea is to allocate available state grants based not on merit, but on need. An additional recommendation is to require colleges to notify students of their loan balance in order to help inform students when making borrowing choices as they make their way through school.
On the federal level, the report gives policy suggestions as well. The report notes that federal student loans are the best bet for students who need to borrow for college. The report recommends first to reduce the need to borrow money by increasing Pell Grants and by promoting state investment in higher education. Secondly, it recommends to keep loan payments manageable by simplifying and improving income repayment options and improving student loan servicing. Additionally, the report suggests the federal government should strengthen college accountability and help families and students make informed borrowing choices.
Changes to the student loans process are coming slowly. This year, the Obama administration made some changes to the Free Application for Federal Student Aid, or FAFSA. Anyone who has applied for student aid is familiar with this long and confusing form. The changes attempted to make the process easier. To start, the application is now available in October instead of January. Next, parents’ tax information from the prior-prior tax year is now required, instead of the prior tax year. The problem with requiring prior tax year information is that many parents had not filed their taxes at the time the students were completing their FAFSA. Now, students can use the IRS’s tool to retrieve data and automatically answer some of the form’s most difficult questions. Hopefully, state and federal governments will continue to make improvements to the student loan process.
If you are one of the many who are struggling with debt, please set up a free appointment with one of our attorneys today. We have offices in multiple locations and look forward to meeting with you to discuss the best course of action.