student loans

Adrian College in Michigan is among a handful that are luring students by promising to repay their loans if they end up in low-paying jobs after graduation.

The Detroit News reports that Adrian is “guaranteeing every graduate would make more than $37,000, or get some or all student loans reimbursed”:

Adrian is among the first colleges to take out insurance policies on every incoming freshman and transfer student who has student loans and at least two years of school remaining. …

Adrian paid roughly $575,000 this year, or $1,165 per student, to take out policies on 495 students. For those who graduate and get a job that pays less than $20,000 a year, the college will make full monthly student loan payments until they make $37,000 a year. With a job that pays $20,000 to $37,000, the college makes payments on a sliding scale.

It’s worked for Adrian – freshmen enrollment is up about 50 students this year – though a neighboring small Christian school, Spring Arbor University, is actually cutting back on its guarantee program, a spokesman says:

“Is there a way to better tailor it to students who really need it and have the desire to have that option? For us, it makes more fiscal sense not to automatically assign it to each and every student.”

Read the Detroit News story.

h/t Phi Beta Cons

Like The College Fix on Facebook / Follow us on Twitter

IMAGE: trustypics/Flickr

 

 

For-profit colleges aren’t ‘voluntarily’ sharing their average debt levels

College students are racking up more debt for school in the Northeast and Midwest than the South and the West, according to a study by the Institute for College Access & Success.

Nearly seven in 10 graduating seniors from public and private nonprofit colleges in 2013 had some degree of student debt, said the press release by the nonprofit group, which promotes more available and affordable higher education.

The average debt for students amounted to $28,400, a 2 percent increase from graduates in 2012. Average debt loads for students at one in five schools jumped 10 percent or more in a single year, and fell at least 10 percent at just 7 percent of schools, the study found.

Reported debt levels may actually skew low because of the limited data set the study used. Only 57 percent of public and nonprofit bachelor’s degree-granting colleges provided data, representing 83 percent of 2013 graduates in those sectors. Too few for-profit colleges “voluntarily” provide their graduates’ debt levels for that category to be included at all.

Though there’s “great variation from college to college, with average debt figures from $2,250 to $71,350” among the 1,000-plus schools the study analyzed, some regions produce graduates with higher debt, it said.

New Hampshire, Delaware, Pennsylvania, Rhode Island Minnesota and Connecticut topped $30,000 for average student debt in 2013. New Mexico was the only state below $20,000. Average debt tops more than $35,000 at 129 colleges, the study found.

Colleges in Pennsylvania dominate the list of high-debt public schools ($33,950 and up), including four University of Pittsburgh campuses and “multiple” Pennsylvania State University campuses. High-debt private schools are more spread out, with high-profile names including Abilene Christian in Texas and Quinnipiac University in Connecticut.

highdebtcolleges.InstituteforCollegeAccessandSuccess

Low-debt schools ($2,250-11,200) are split almost equally between private nonprofit and public, with three California State University campuses and four City University of New York campuses making the list. Princeton is on the list, as are two Appalachian schools specifically targeted at low-income students – zero-tuition Berea College and the College of the Ozarks, where students work in lieu of paying tuition.

“Graduates from New Hampshire colleges are almost twice as likely as Nevada graduates to leave school with student loan debt, and they owe almost twice as much as graduates from New Mexico colleges,” Debbie Cochrane, institute research director and co-author of the report, said in the release. “The importance of state policy and investment cannot be overstated when it comes to student debt levels.”

The study notes that around a fifth of the 2013 graduates’ debt is comprised of private loans from banks and lenders. It describes these as one of the “riskiest” ways to pay for college and “no more a form of financial aid than a credit card.”

“Private loans lack the basic consumer protections and flexible repayment options of federal student loans, such as unemployment deferment, income-driven repayment, and loan forgiveness programs,” the study reads.

To remedy the lack of data transparency for the short-term, the authors call for the Department of Education to track both federal and private loans through its Integrated Postsecondary Education Data System.

The report highlight one school’s wild debt swings year to year to illustrate the data’s weaknesses.

The nonprofit University of the Sciences in Philadelphia reported $71,370 debt for the average borrower in 2013, while the year prior the graduates averaged only $10,620 in debt. “Such a large change in a single year raises questions about both figures,” the study reads.

“This is too important an issue for students, schools, and policymakers to rely on voluntary, self-reported data,” said Matthew Reed, institute program director and co-author of the report. “Federal collection of both federal and private loan debt at graduation is both necessary and long overdue.”

For the long-term, the department should collect data through the National Student Loan Data System – which currently reports every federal loan – directly from private lenders, the authors said. Such a system would “provide accurate and comprehensive data on private loan borrowing while minimizing the reporting burden for colleges,” the study says.

Other policy recommendations include reducing the need to borrow by increasing the federal Pell Grant program, keeping loan payments manageable by raising awareness for repayment options and allowing students to apply for financial aid earlier to determine how much they are eligible for before they apply to school.

College Fix reporter Michael Cipriano is a student at American University.

Like The College Fix on Facebook / Follow us on Twitter

IMAGE: thisisbossi/Flickr

Remember the Obama administration official who said judging colleges was like “rating a blender“? Not so, says Reason, because “unlike blenders, colleges obstruct efforts to test their performance”:

Uncle Sam hands out $150 billion in financial aid to universities every year—about twice as much as all the states combined. Yet, notes State University of New York-Albany’s Ben Wildavsky, colleges resist independent, national, standardized testing that would allow lawmakers to judge what exactly this aid is accomplishing—and give parents the information to determine the educational bang they are getting for their buck.

The administration’s proposed “scorecard” includes what’s known as a loan forgiveness provision:

Currently, “new borrowers” who obtained their first federal student loan after 2007 are eligible to signup for something called the “Pay As You Earn” program. This program caps their loan repayment at 10 percent of their income for 20 years after which the remainder is written off. … In other words, students take loans according to their needs, and repay them according to their ability and hit taxpayers for the rest. The president wants to expand this socialist prescription to all students who receive federal loans.

Even Sallie Mae, the government’s student-debt manager, acknowledges that costs are skyrocketing — up “27 percent beyond inflation over the last five years” — in part because “parents are picking up an ever smaller share of their kids’ college costs and the government (and other) grants ever more,” Reason says. 

Read the whole article here.

Like The College Fix on Facebook / Follow us on Twitter

IMAGE: LendingMemo.com/Flickr

Here’s a clever little story.

A Michigan student with mammoth student loans has come up with an ingenious scheme to shave off some of the debt. He’s selling ad space on top of his graduation cap.

Alex Benda, of the University of Michigan-Flint, has piled up about $30,000 in student loans on his way to a business degree.

Now Benda is attempting to sell one hundred 1in squares on his 10x10in cap at the rate of $300 per square.

Happens to be the exact amount he needs to pay off his college debt.

“It’s scary to think I’m about to go out into this economy and try to find a job and have all this debt I’ll have to start paying,” Benda, 22, told USA Today. “I started thinking, Do I have anything available I could sell?”

Benda claims he has already raised $1200. According to my calculations, that leaves him with 96 squares left to sell.

Not sure how much marketing buzz you’ll generate with a 1in ad on top of a random guy’s graduation cap in Flint. But hey, you’ve got to admire this fellow’s creativity–and his P.R. chops.

(Image: trustypics.flickr)

This funny student loan “horror” video is making the rounds online. It would be more funny if it weren’t so real…

The comment thread on YouTube indicates that quite a few young people out there can sympathize with the lady in this video.

YouTube user Leu Yang wrote: “No too real man, just too real.”

Roberta Las Casas wrote: “OMG can you imagine this for real!!! I would have one of those suckers at my house everyday!!! LOL”

Click here to Like The College Fix on Facebook  /  Twitter: @CollegeFix

Fox News reports that the deal struck Thursday to lower student loan rates back to their pre-July terms is already prompting criticism from some who called it a stopgap measure instead of a permanent solution:

A highly touted student loan “deal” began to run into criticism Thursday as advocacy groups and Democratic lawmakers complained it would merely provide short-term relief in exchange for higher borrowing costs on future students.

A few years from now, students with subsidized loans could easily be paying far higher rates than the average person paying off a car loan. In the near-term, the college agreement would rein in student loan rates, which for new subsidized Stafford loans had doubled from 3.4 percent to 6.8 percent at the beginning of the month.

Under the deal, undergraduates this fall could borrow at a 3.9 percent interest rate.

But higher rates would still loom. The rates would only last through the 2015 academic year, after which interest rates are expected to climb above where they were when students left campus in the spring. Rates for undergrads would be capped at 8.25 percent.

Sen. Jack Reed, D-R.I., was one of the first senators to criticize the plan, after the official roll-out of the proposal earlier Thursday.

“Instead of preventing the doubling of these rates to 6.8 percent, it would gradually raise these rates above 6.8 percent,” he said in a statement. “We might see one or two or three years of rates that are relatively below that number, but inevitably, mathematically those rates will go beyond 6.8 percent. And the caps are rather high.”

Liberal advocacy groups echoed the complaints.