Category Archives: Student Debt

What students owe and why it matters.


College Brings Opportunity, but Paying for It Offers Challenges, Fed Chair Says

Higher education is one of the “cornerstones” of economic opportunity, Janet L. Yellen, chair of the Federal Reserve Board, said on Friday in an unusual and closely watched speech about growing inequality. But her remarks, given at the Federal Reserve Bank of Boston, did not cast higher education’s role in an entirely favorable light.

The earnings premium of a college degree has grown, Ms. Yellen said in her prepared remarks, and the “net returns for a degree are high enough that college still o…


Student-Loan Defaults Decline in Latest Data, Education Dept. Says

The percentage of borrowers who defaulted on their student loans in the past three years has dropped across all higher-education sectors, according to data released on Wednesday by the U.S. Education Department. The overall default rate for borrowers who began repayment between October 1, 2010, and September 30, 2011, fell to 13.7 percent from the previous year’s 14.7 percent.

Here’s a snapshot of the rates by sector over time, with the new data in the last of the three columns:

Screen Shot 2014-09-24 at 12.08.18 PM

What’s less cle…


What You Need to Know About This Week’s Student-Loan Default Rates

The U.S. Department of Education is scheduled to release this week its annual cohort default rates, which describe what percentage of borrowers are defaulting on their student loans. The data were due to be released to colleges on Monday and to the public in the middle of the week. Here’s what you need to know:

What’s new this year?

There is one big change. This is the first year colleges will be judged on a three-year default rate, measuring whether borrowers who began repaying their loans betw…


Black Students Graduate With More Debt Than Whites, Study Finds

Black college graduates take on significantly more student debt than do their white counterparts, according to a new study by Gallup.

The study, conducted with Purdue University and the Lumina Foundation, found that half of black students who graduated from 2000 to 2014 reported graduating with more than $25,000 in debt, compared with 34 percent of white graduates who reported that level of debt. According to the study, the gap has remained roughly the same during the past four decades.

The stud…


Panel Will Guide Expansion of Education Dept.’s Debt-Relief Program

The U.S. Department of Education announced plans on Tuesday to establish a negotiated rule-making panel charged with hashing out how to expand the income-based student-loan repayment program. In a notice to be published in Wednesday’s Federal Register, the department specifies that a panel of negotiators will meet in February 2015 for as many as three sessions.

President Obama announced plans in June to extend the Pay as You Earn benefit to people with older loans. The program caps participants’…


Student Debt in Mind, Education Dept. Renegotiates Loan Servicers’ Contracts

The U.S. Department of Education on Friday announced it had renegotiated its contracts with federal student-loan servicers, giving them more incentives to keep borrowers from defaulting on their loans.

President Obama announced plans to renegotiate the contracts in June, but Friday’s announcement provides more detail. For example, customer-satisfaction surveys will now play a larger role in how the servicers are evaluated, according to a statement from the department.

Student-loan servicers have…


Adjuncts Would Qualify for Loan Forgiveness Under Proposed Bill

Adjunct professors would become eligible for a federal student-loan-forgiveness plan available to public servants under the terms of a bill introduced on Thursday by Sen. Richard A. Durbin, an Illinois Democrat.

The Public Service Loan Forgiveness Program allows employees of nonprofit organizations—including full-time professors at public universities—to have their federal student loans forgiven after making 120 payments while working in that capacity. Eligibility for the program would be ex…


New Analysis Says College Is (Surprise!) Still Worth the Cost

An analysis released on Wednesday by the Federal Reserve Bank of Cleveland comes to a familiar conclusion about the value of a college education: While earning a degree saddles many people with student-loan debt, it still pays off in the long run. Among the evidence cited by the researchers, Daniel Carroll and Amy Higgins, is the advantage in earnings enjoyed by those with college degrees. The report also notes that students who attend college but do not earn degrees get little to no earnings a…


Illinois Sues 2 Settlement Companies Over Student-Debt Claims

Illinois’s attorney general on Monday filed lawsuits against two companies that claim to help borrowers free themselves from student-loan debt. The lawsuits accuse the companies of having engaged in deceptive practices such as charging upfront fees for services that the government provides free or that are nonexistent.

The lawsuits, which are the first to be filed by a state attorney general against settlement companies over deceptive practices in student-loan debt, were aimed at First American …


Despite Criticism, Education Dept. Extends Loan Contract With Navient

The U.S. Education Department has extended its contract with Navient, a student-loan servicer and collection agency that was formerly a division of Sallie Mae, despite allegations it has overcharged borrowers, The Wall Street Journal reports.

Navient’s work for the federal government was worth $106-million last year, and its contract would have expired this month. Sallie Mae, which in April was divided into two companies, Navient and Sallie Mae Bank, agreed last month to pay $97-million to settl…