http://www.masspirgstudents.org/reports/higher-education/higher-education-reports http://www.masspirgstudents.org/reports/higher-education/higher-education-reports/cutting-interest-rates-lowering-student-debt-an-analysis-of-the-congressional-proposal-to-cut-student-loan-interest-rates-in-half2 In 21st century America, a college education is critical for http://www.masspirgstudents.org/reports/higher-education/higher-education-reports/cutting-interest-rates-lowering-student-debt-an-analysis-of-the-congressional-proposal-to-cut-student-loan-interest-rates-in-half2 Tue, 17 Jun 2008 15:28:07 -0500 http://www.masspirgstudents.org/reports/higher-education/higher-education-reports/student-debt-and-consumer-costs  Higher education in America continues to be critical for both individual success and the economic and political health of our country. While college attendance has grown over the past two decades, state appropriations and federal aid have failed to keep pace with the rising cost of college. As a result, more students than ever must rely on student loans to pay for a four-year degree and start their post-collegiate lives with significant debt.In fact, student loan debt is rising faster than the cost of living or health care costs. Between 1993 and 2004, the average debt for college graduates with loans increased by 107% to $19,200. At the same time, in the Boston area, the cost of living increased by 37%, and health care costs (including insurance, drugs and medical care) increased by 74%.Two-thirds of college graduates in 2004 finished school with student loans. After student loan interest rates increase significantly in July 2006, many borrowers will find it even harder to afford necessities such as health care, rent and groceries because of higher loan payments.High debt can affect where graduates live, the kind of careers they pursue, when they start a family or purchase a home, and whether they can save for retirement. The combination of high student debt and low earnings can lead to default, ruined credit and wage garnishment.To reduce student debt and ensure that higher education remains within reach for all Americans, we need to increase need-based grant aid; make loan repayment fair and affordable; protect borrowers from usurious lending practices; and provide incentives for state governments and colleges to control tuition costs.  http://www.masspirgstudents.org/reports/higher-education/higher-education-reports/student-debt-and-consumer-costs Tue, 17 Jun 2008 15:28:07 -0500 http://www.masspirgstudents.org/reports/higher-education/higher-education-reports/paying-back-not-giving-back-student-debts-negative-impact-on-public-service-career-opportunities American colleges and universities play a pivotal role in training the nation’s citizens, leaders, innovators, public servants and educators. In today’s economy, a college education is more desirable than ever before – millions of high school students strive for its promise and the benefits it brings for both the individual and society.In the past decade, government support for higher education has declined; as a result, tuition and fees have increased. Grants have failed to keep pace. As costs continue to swell, students are taking on more and more debt to pay for their degrees. Two-thirds of all four-year college graduates in 2004 left school with student debt, compared with less than one-third in 1993.Recent graduates, especially those with low and moderate incomes, must spend the vast majority of their salaries on necessities such as rent, health care, and food. For borrowers struggling to cover basic costs, student loan repayment can create a significant and measurable impact on their lives. This report focuses on such “burdensome” or “unmanageable” debt. Last fall, two economists, Sandy Baum and Saul Schwarz, published a report proposing a new graduated benchmark system for estimating burdensome student debt. They posit that recent graduates with very low salaries—about half of the median individual income in the U.S.—cannot manageably repay their student loan debt while meeting their other needs. Graduates with incomes above this minimum threshold can manageably pay no more than a certain percentage of their income on their student loan debt. Their formula takes into account the fact that recent graduates with low incomes experience financial constraints at lower debt levels than their higher earning peers.This report looks at the issue of unmanageable debt as it pertains to college graduates entering two critical public service careers: teaching and social work. Given increasing dependence on student loans, borrowers graduating from four-year schools and working in these two public service careers often carry more debt than they can manage. The prospect of burdensome debt likely deters skilled and dedicated college graduates from entering and staying in important careers educating our nation’s children and helping the country’s most vulnerable populations.In order to demonstrate the impact of student loan debt on public servants, we looked at average starting salaries of teachers and social workers nationally and by state and estimated what percentage of these new public servants would carry unmanageable student loan debt. “Unmanageable” means that their loan payments would have a measurable and burdensome impact on their lives and would likely hinder their ability to pay for basic necessities.Factoring in high debt levels, the congressional fixed 6.8% interest rate for federal student loans, and low starting salaries, we found that 23% of public four-year college students graduate with too much debt to manageably repay their loans as a starting teacher. Thirty-seven percent (37%) of public four-year college graduates have too much debt to manage as a starting social worker. Graduates of private four-year colleges face even more significant debt burdens. Thirty-eight percent (38%) of private four year college students would face an unmanageable debt burden as a starting teacher. Fifty-five percent (55%) of private college graduates would face serious repayment challenges as a starting social worker.The situation detailed in this report does not belong to any one state or any one profession. The jobs profiled serve as a bellwether. As students increasingly finance college through loans, debt has become a national issue with serious policy implications that demands a national solution.Graduates of public and private universities who want to become teachers may encounter greater financial obstacles in some states than others, given the average starting teacher salary and cost of living. The ten states in which the highest percentage of college graduates would face unmanageable debt as a starting teacher include New Hampshire, Wisconsin, North Dakota, Vermont, Utah, Maine, South Dakota, Montana, Connecticut, and Minnesota.Having such a high percentage of students facing burdensome debt has consequences both for specific professions of high social value and the entire economy. To solve this problem and ensure that higher education remains within reach for all Americans, we need to increase needbased grant aid; make loan repayment fair and affordable; protect borrowers from usurious lending practices; and provide incentives for state governments and colleges to control tuition costs. http://www.masspirgstudents.org/reports/higher-education/higher-education-reports/paying-back-not-giving-back-student-debts-negative-impact-on-public-service-career-opportunities Thu, 28 Dec 2006 11:48:48 -0600 http://www.masspirgstudents.org/reports/higher-education/higher-education-reports/easy-money-how-congress-could-increase-federal-student-aid-funding-at-no-additional-cost-to-taxpayers Over the last three decades, higher education has become an even greater necessity for all Americans. Our citizens know that the key to economic success for them and their children is to invest in education.Since the Higher Education Act was passed in 1965, the nation has made enormous strides toward realizing the dream of equal access to a college degree. However, we still fall short of ensuring that every qualified high school student has the opportunity to pursue postsecondary education, regardless of income.Over the last three years, higher education costs have increased, largely as a result of state budget cuts. Over the same period, funding for critical federal student aid programs has been level-funded, decreased, or proposed for elimination entirely.Congress recently passed a budget for Fiscal Year 2006 that includes significant cuts to critical student aid programs, including $7 billion to federal student loan programs. These cuts threaten to put affordable higher education even further out of reach for millions of students.Congress has the opportunity this year, however, to increase student aid funding by billions of dollars at no additional cost to taxpayers. Bipartisan legislation is pending in Congress that would increase federal student aid for those colleges and universities that utilize the more economically efficient of the two federal student loan programs. The Student Aid Reward (STAR) Act, introduced in March 2005, would increase student aid funding by redirecting the subsidies currently going to student loan companies to needy students.Currently, two federal student loan programs provide essentially the same loans and interest rates to students, but one costs taxpayers and the federal government several billion dollars more annually than the other. According to President Bush's 2006 education budget, student loans made through the more expensive program cost the federal government nearly $11 more for every $100 loaned to students than the same loans made directly by the federal government. By encouraging more schools to participate in the more efficient program, Congress has the opportunity to increase student aid funding by billions of dollars, without any additional cost to taxpayers, students, or their families.Key findings:The Student Aid Reward Act could generate $4.4 billion in new federal money next year, based on the savings of all colleges and universities switching into the more cost effective Direct Loan program.At least $3 billion of this money could be used to increase federal student aid funding at all colleges and universities across the country. This student aid increase would be available at no additional cost to taxpayers.This $3 billion increase would be enough to give each Pell Grant recipient almost $600 more in additional grant aid a year, which is six times the proposed increase in the Pell Grant maximum for next year in the FY06 federal budget. http://www.masspirgstudents.org/reports/higher-education/higher-education-reports/easy-money-how-congress-could-increase-federal-student-aid-funding-at-no-additional-cost-to-taxpayers Thu, 28 Dec 2006 11:48:48 -0600 http://www.masspirgstudents.org/reports/higher-education/higher-education-reports/private-loans-whos-borrowing-and-why-private-label-borrowing-by-students-outside-of-the-federal-loan-programs As the purchasing power of federal and state grants continue to decline in relation to increasing tuition and living expenses, students have increasingly relied on loans in order to finance their college education. Almost 65 percent of college students graduated with federal education loan debt in 1999-2000, and the average undergraduate borrower left school nearly $17,000 in debt with federal student loans.Federally-backed loan programs, including the Stafford and Perkins programs, were instituted to offer students better terms and conditions on loans than those available in the private market, making it easier for students to afford higher education and later on, more manageable for students to repay loans used to finance their education.In recent years, however, increases in private education loan borrowing, in which students borrow outside of the federal loan programs, have sparked concerns within the higher education community. Private education loans are not subject to the same interest rate or borrowing caps as federal student loans, nor do they offer the same flexibility in payment plans, which can make repaying private loans a substantial burden for some students. According to the College Board, private label education borrowing has increased 39 percent over the past two years.This jump in private loan borrowing has led some to conclude that current caps on federal education loans are too low to cover the loan funds now needed by students. However, to fully understand the factors driving private label student borrowing, it is necessary to take a closer look at this population of borrowers.This report analyzes private label borrowing by students, using data from the 1999-2000 Department of Education's National Postsecondary Student Aid Survey (NPSAS), to better understand what factors drive students to borrow private education loans. Family income, students' costs of attendance, and borrowing in the federal programs are some of the factors discussed in this analysis.According to the Department of Education's data, private label borrowing accounted for only a small percentage of overall student borrowing, and many private label student borrowers took on private loans without demonstrated financial need and without taking full advantage of loans available through the federal programs.Key findings:• Small percentages of students borrowed private label loans: 3.6 percent of students overall took on private debt, and among Stafford borrowers, only 10 percent borrowed private label loans.• Nearly 24 percent of students with private label debt did not borrow any Stafford loans, and 26 percent borrowed less than the available maximum Stafford loan. The average borrower with Stafford loans below the maximum level could have borrowed about 40 percent more in the Stafford loan program, or $6,623 over the course of a four-year undergraduate education.• Nearly three quarters of private label borrowers who took on private label debt did not have demonstrated financial need, defined by the federal government as additional costs of attendance beyond federal loan, work-study and grant assistance. http://www.masspirgstudents.org/reports/higher-education/higher-education-reports/private-loans-whos-borrowing-and-why-private-label-borrowing-by-students-outside-of-the-federal-loan-programs Thu, 28 Dec 2006 11:48:48 -0600 http://www.masspirgstudents.org/reports/higher-education/higher-education-reports/lending-a-hand-a-report-on-the-lobbying-expenditures-and-political-contributions-of-the-five-largest-student-loan-corporations The student loan industry, a $40 billion dollar-a-year market, is dominated by federally subsidized lenders. These lenders receive millions each year in subsidies from the federal government in addition to income from loan interest payments. This report documents the political spending of the five largest holders of federally subsidized student loans, namely Sallie Mae, the Student Loan Corporation of Citibank (a subsidiary of Citigroup), First Union National Bank, Wells Fargo Education Financial Services, and the National Education Loan Network (Nelnet).The student loan industry has experienced rapid growth in recent years, as increasingly higher numbers of students borrow to finance their college education. At four year public colleges, annual borrowing rose 65 percent from 1992-1993 to 1999-2000.As the student loan market has expanded, the student loan industry as a whole has increased its involvement in the political process by increasing political contributions and lobbying expenditures.Some key findings in this report include:• Political spending by the top five student loan corporations, including lobbying expenditures, totaled almost $60 million over the last three election cycles.• Employees of the top five student lenders contributed more than $1.1 million to the political process during the last three election cycles in direct hard money contributions to candidates, donations to candidate and issue Political Action Committees (PACs), and contributions to political parties.• The top five lenders’ PACs contributed more than $3.7 million to federal candidates over the last three election cycles.• Soft money contributions from the five largest student lenders totaled almost $5 million for the last three election cycles. Sallie Mae’s soft money contributions for the 2002 cycle so far total almost $300,000, more than tripling its total soft money spending in the 2000 cycle.• Lobbying expenditures accounted for more than 80 percent of the lenders’ political budget, with the top five lenders spending $49.4 million on lobbying over the last three election cycles. Sallie Mae and Citigroup (parent company of Citibank) spent more than $42.9 million in lobbying expenditures during this period, accounting for almost 90 percent of the top five lenders’ lobbying expenditures. http://www.masspirgstudents.org/reports/higher-education/higher-education-reports/lending-a-hand-a-report-on-the-lobbying-expenditures-and-political-contributions-of-the-five-largest-student-loan-corporations Thu, 28 Dec 2006 11:48:48 -0600 http://www.masspirgstudents.org/reports/higher-education/higher-education-reports/at-what-cost-the-price-that-working-students-pay-for-a-college-education A college education is one of the best investments of a lifetime. Bachelor degree recipients earn 80% more than high school graduates, or $1,000,000 over a lifetime in the workforce.1 Yet, a higher education is not simply a means to achieve higher earning potential, it should also be a life enriching experience. Colleges and universities foster both academic and personal development – from community service and civic engagement, where students learn how to become active participants in democracy, to team athletics, where students gain valuable leadership experience.However, as college costs rise many students are turning to working long hours to finance their education. Nearly half of all full-time working students are working enough hours to hurt their academic achievement and the overall quality of their education. At the same time the majority of these students (63%) reported that they would not be able to attend college if they did not work.In recent decades as college costs have risen federal grant-aid has failed to keep pace. The average grant award per student, as a percentage of average tuition and fees at a typical public four-year institution, has dropped by nearly one-third since 1982,2 and the typical student now graduates with $16,928 in federal student loan debt.3Grant aid has helped many students to minimize the negative impact of working and borrowing, but still lags behind what is necessary to provide equal access to a quality education. The students who are most likely to suffer the effects of excessive working are also more likely to take on student debt to finance their education. There is also significant evidence to show that working not only impacts the quality of education, but also persistence.Despite these findings, students are likely to face even greater hardship in the future. Gloomy state and federal budget forecasts have already begun to negatively impact tuition at public institutions and the availability of federal grant aid. In order to ensure that access to and the quality of a college education is not further compromised, it is our recommendation that state and federal lawmakers should prioritize funding for higher education. Specifically, we call for increases in student grant aid at the federal level. Funding need-based grant aid is a proven strategy for providing access to a college education and minimizing the negative impacts of excessive working and college debt.Key Findings:• Forty-six percent (46%) of all full-time working students work 25 or more hours per week.• Forty-two percent (42%) of these students reported that working hurt their grades.• Fifty-three percent (53%) of all full-time working students who work 25 or more hours per week reported that employment limited their class schedule, and 38% said that work limited their class choice.• Sixty-three percent (63%) of all full-time working students who work 25 or more hours per week reported that they would not be able to afford college if they did not work.• One in five full-time working students works 35 or more hours per week.1 The College Board. 2001. Trends in Student Aid. Washington, D.C.2 Ibid.3 The State PIRGs’ Higher Education Project. 2002. The Burden of Borrowing: A Report on the Rising Rates of Student Loan Debt. Washington, D.C. http://www.masspirgstudents.org/reports/higher-education/higher-education-reports/at-what-cost-the-price-that-working-students-pay-for-a-college-education Thu, 28 Dec 2006 11:48:48 -0600 http://www.masspirgstudents.org/reports/higher-education/higher-education-reports/the-burden-of-borrowing-a-report-on-the-rising-rates-of-student-loan-debt Higher education is critical to the future success of Americans. In addition to the inherent benefits of a higher education, a college degree is worth 75% more than a high school diploma or more than $1,000,000 over a lifetime in the workforce. However, as college costs continue to swell, students are increasingly shouldering high levels of debt to pay for a college education.Thirty-nine percent (39%) of student borrowers now graduate with unmanageable levels of debt, meaning that their monthly payments are more than 8% of their monthly incomes. According to new data from the Department of Education’s National Postsecondary Student Aid Study (NPSAS), not only are the majority of students turning to loans to finance college, but debt levels are also escalating. In 1999-2000, 64% of students graduated with student loan debt, and the average student loan debt has nearly doubled over the past eight years to $16,928.Often the students who are most likely to graduate with debt are the same students who experience financial hardship after graduation. In 1999-2000, 71% of students from families with incomes less than $20,000 graduated with debt, compared to 44% of students from families with incomes more than $100,000. In all likelihood, students from low-income backgrounds receive limited financial assistance from and may have financial obligations to their families after graduation.In addition, some groups of students are more likely to face unmanageable debt burden after graduation. Fifty-five percent (55%) of African-American student borrowers and 58% of Hispanic student borrowers graduated with unmanageable debt burden.Data also suggest that Pell grant funding impacts borrowing trends among low-income students. Over the past decade, when Pell grant funding was cut, the percentage of low-income students who borrowed and the average debt among these students increased. In contrast, in recent years, when Congress increased Pell grant funding, the percentage of low-income students who borrowed stabilized, while growth in the average debt among these students slowed.There are several possible explanations for increases in student borrowing. First, the strength of the Pell grant has declined from covering 84% of tuition at a four-year public institution in 1975-76 to 39% today. 1 While Congress has increased funding in recent years, the Pell grant maximum has not been able to keep up with inflation and rising tuition costs. As a result, low-income students are forced to borrow to cover that unmet need. Second, wealthy families may be shifting more of the cost of college from savings to student loans. Also, as tuition increases faster than inflation and median income, students overall are facing increasing levels of need.We need to look for solutions that make college more affordable and protect students from unmanageable debt burden. Congress should increase grant aid funding, reduce the cost of student loans, and provide flexibility within the student loan program to help make college more affordable for all Americans. http://www.masspirgstudents.org/reports/higher-education/higher-education-reports/the-burden-of-borrowing-a-report-on-the-rising-rates-of-student-loan-debt Thu, 28 Dec 2006 11:48:48 -0600