How to navigate the college loan mess
- by admin
More than three years after the Great Recession began, colleges and universities still aren’t making the loans they were supposed to in a way that’s affordable for students and families, according to a new report by a watchdog group.
The Consumer Financial Protection Bureau said the amount of loans and interest rates students are paying have not kept up with inflation, despite the fact that they received loans from lenders that weren’t necessarily going to have to pay back those loans.
“We know that there’s a mismatch between the way student loans are being paid and the way that they’re being managed,” said Richard Cordray, the CFPB’s acting director.
“There’s a lack of clarity and there’s also a lack and uncertainty and an inability to really figure out what’s happening and where we’re going,” he added.
The CFPBC report comes as the Trump administration has taken a more aggressive stance toward colleges, slashing loan interest rates and cutting back on the number of scholarships and grants.
While the Trump White House has focused its efforts on lowering student loan payments, it’s not clear if they will be enough to keep up with the cost of college, which has soared from $1,400 in 2012 to more than $1.4 million last year.
The report found that a large percentage of the nation’s colleges and colleges and higher education organizations have not been providing the same level of financial support to students and parents that they promised.
“The federal government’s ability to make meaningful progress in lowering student debt is undermined by a lack.
of clarity in how student loan interest and payment rates are being calculated and the lack of transparency in the way those rates are calculated,” the report said.
It said a lack in the federal government has allowed colleges and the federal loan servicing industry to act like they have no idea what is happening in the student loan market, when they are.
“Without clear guidance, there is a risk that students and their parents may have to wait years to receive their payments,” it said.
While colleges have been hit hard by the rising cost of education, they’ve also received a lot of help from the federal and state governments.
In 2016, Congress provided $4 billion in aid to universities, but the CFIB found that it was only partially used, and that colleges have used much of it for administrative costs, including to provide free tuition.
“Federal agencies have failed to fully account for the cost associated with their administrative spending, including interest, fees, and administrative support,” the CFCB said.
The administration is also taking a more conservative approach to the way it calculates tuition, including cutting back the number and size of scholarships that colleges are allowed to offer.
In 2018, the administration eliminated more than a dozen scholarships, which were once allowed under the Obama administration.
The new policy has left students paying even more to attend these schools.
The president’s budget proposal to help lower student loan debt by $1 trillion over the next decade is expected to be released on Friday.
More than three years after the Great Recession began, colleges and universities still aren’t making the loans they were supposed…