Twenty percent of American adults carry student loan debt. Are you one of them? According to a recent Urban Institute report, the amounts people are borrowing are increasing sharply.
The trend isn’t exclusive to one particular demographic, either. Adults of all ages and backgrounds are coming out of school with tens of thousands of dollars in debt—so you’re not alone, if that’s any consolation. Members of Congress and other officials are finally taking notice, due in part to the fact that the rising number of people defaulting on their loans is likely burdening the U.S. economy as a whole. So what is the government doing to tackle the student loan debt/default problem? Here’s the latest:
Setting Limits on Students’ Borrowing
A U.S. Department of Education program currently being tested at select schools is giving individual colleges the authority to limit the amount their students can borrow. A participating Arizona community college has reduced the amount students can borrow by $2000, and a school in Florida is barring students from taking out any unsubsidized loans [The Chronicle of Higher Education].
Student Borrower Bill of Rights
Among some recent student debt-related proposals introduced by a group of U.S. Senators is a “student borrower bill of rights.” The core of the legislation focuses on increasing disclosure from lenders borrowers about their payment options, and regulations on how creditors must apply people’s payments to minimize what they owe [Bloomberg Businessweek].
Shifting Accountability to Institutions
Another measure being explored would require schools with high rates of defaulted loans to pay a penalty to the government proportional in size to the amount of their students’ defaulted debt. This “institutional risk sharing,” some say, will motivate schools to ensure that borrowers are well informed, and that loans are made to those most likely to pay them back [Inside Higher Ed].
Who do you think should be held most accountable for student loan debts? The government, lenders, schools or the students themselves? Tell us what you think.