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President
NCHELP
September 2007
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What reality makes financial literacy difficult for college students?
It happens too late in the borrowing process. By the time an individual has aid awards, a loan is likely in play, and it’s too late. Financial literacy should occur during secondary school as the companion piece to college access. Incoming freshmen often view financial aid like casino visitors view poker chips — they’re only partially real. |
Should today’s guarantors be tomorrow’s risk managers?
To some extent they already are. Of course, there’s a federal backstop paying off the loan. But both lenders and guarantors are at risk if default rates go up. Extraordinary default prevention efforts have emerged and been refined for about five years now. Further work should be encouraged by Congress to insure that these efforts are not inhibited by regulation. |
Describe Student Loan Hell.
It’s a condition caused by inflexible default regulations that disallow settlements and bankruptcies. It’s hellish because once on the road to it, it’s inevitable a borrower will go there. Then, whether the borrower is paying or not, the debt never decreases. |
Can you suggest a way out of Student Loan Hell?
Since federal regulations and legislation created it, that’s what it will take to end it. |
Will employers become involved in repaying student loans?
I’ve heard of many instances where they already are. I’m intrigued by ‘cafeteria’ plans, and I would like to see student loan repayment added as a new benefit. I think the human capital investment expertise now resident in corporate HR departments will likely help this along. |
What will the Stafford Loan be two years from now?
It’s very difficult to predict. The Higher Education Act is 42 years old. The political climate in Washington today is not policy driven, and for the 2008 elections, the politics are uncertain. | |
TOPICS: Student Services
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