If you’re a regular reader of my blog, then I might sound like a bit of a broken record when I say that student loan reform is going to happen. Well, it is.
First of all, there is widespread, bipartisan agreement that our current system is flawed and unsustainable. Furthermore, the U.S. Dept. of Education will soon be selecting (or renewing) contracts for federal student loan servicing and debt collection, two areas that need some major industry-wide changes. Moreover, even now, the U.S. Dept. of Education is in the process of creating new regulations governing loan forgiveness and for-profit schools. And finally, the Higher Education Act (HEA), which is the statute that governs much of the federal student loan system, is up for reauthorization; the process of reauthorizing the HEA has historically been a vehicle for making big changes to the overall federal aid system.
Reform is happening. But what is that reform ultimately going to look like?
There are a lot of proposals out there from presidential candidates, lawmakers, think tanks, advocacy and policy organizations, and many other stakeholders. There are proposals for free public postsecondary education. There are calls to allow borrowers to refinance their student loans at lower interest rates. There are proposals to streamline income-driven repayment plans by combining several confusing plans into one and creating a system of automatic payments through payroll deductions or the IRS tax filing system. There are ideas to better “target” safety net programs like loan forgiveness and discharges (which could mean a variety of things).
If only there was an existing blueprint of a student loan system that generally works, or at least works better than what we have now…Read More