February 21, 2013
By Alex Zimmermann, Will Marble
The federal government launched an initiative Thursday to make repayment easier for students struggling to pay back their loans.
The Consumer Financial Protection Bureau issued a Notice and Request for Information, calling on “financial institutions, colleges and universities…students and families” to submit comments on the state of private student loans.
“Too many private student loan borrowers are struggling with unwieldy debt that prevents them from climbing the economic ladder,” CFPB Director Richard Cordray said in a press release. “We will be analyzing plans for policymakers to consider that might help avoid a repeat of the mortgage meltdown for today’s student loan borrowers.”
The announcement called for input on a variety of issues, including the current state of student loan burdens and for examples of successful alternative payment plans for struggling borrowers.
While total student loan debt recently surpassed total credit card debt, Penn students are largely unaffected by private loan policies. Only 289 undergraduates have private loans this school year, said Sharon Pepe, senior director of credit services at Student Financial Services. Private loans account for only about 5 percent of loans among graduate students at Penn. Most loans Penn students receive are through the federal government.
“Although private lenders are trying to make their products more attractive by offering fixed rate options, it’s still more difficult to qualify for those loans,” she said.
Top Colleges educational consultant and 1989 Graduate School of Education alumnus Steven Goodman said the high amount of currently outstanding student debt raises the issue of rapidly increasing tuition.
“The loan debt isn’t there because somebody waves a wand and it’s there. The reason there’s so much debt is because tuition is so high,” he said. “The government really hasn’t done anything to contain college costs besides just talking about college costs.”
He added that he hopes students take this opportunity to put pressure on the government to take significant action to curb student debt and limit the rate of tuition growth.
“The average student at Penn … doesn’t have a personal lobbyist, whereas most big universities do,” Goodman said. “I think collectively we’re entering an era where the debt is so high that it’s affecting the aspirations of a generation.”