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Symposium—Student Loans

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[acc_item title=”Foreword, by Rohit Chopra”]

Fifty years ago, President Lyndon B. Johnson signed the Higher Education Act into law as part of his Great Society agenda.  He said, “[e]ducation in this day and age is a necessity.”

. . .

Without market transparency and rigorous analysis, our work to preserve the goal of ensuring a better life for everyone who pursues a college degree will go unfulfilled.

Read the full Foreword here.

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[acc_item title=”Remarks as Prepared for Delivery by Senator Elizabeth Warren, March 12, 2014″]

. . . First, we should end the practice of profiting from student loans, period.  Second, bankruptcy protections on student loans should be reinstated.  This will protect struggling students.  And third, give colleges some “skin in the game” when it comes to student debt. When students default, they feel the pain, and so do the taxpayers who may ultimately have to pick up the bill.  Colleges should feel some of that pain too.  And it should affect the colleges who are taking on lots and lots of students who are not repaying their debts.  And fourth, refinance student loans to wring some of the profits out of the system and put the money back in the pockets of young borrowers.  We’ve got to do this.

Read Senator Warren’s remarks in their entirety here.

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[acc_item title=”Student Loan Debt in Bankruptcy: An Empirical Assessment, by Daniel A. Austin”]

Education loan debt in the United States now stands at approximately $1.2 trillion.  Some thirty-nine million Americans, nearly 20% of U.S. households, owe student loans.  Student loan borrowing has mushroomed in recent years.  In 1990, students borrowed $11.7 billion to fund their educations.  By 2013, students took out $114 billion in new loans.  Student loans are by far the fastest growing component of non-housing consumer debt.  For example, in the fourth quarter of 2013, U.S. households incurred $82 billion in debt (exclusive of housing debt), which is a 3.3% increase from the previous quarter.  Of this amount, $53 billion (65%) was student loan debt.  In contrast, auto loans and credit card debt accounted for only $29 billion.

The rise in borrowing for higher education has been matched by a rise in student loan debt as reported by debtors in consumer bankruptcy cases. This study presents empirical data regarding the growth of student loan debt in consumer bankruptcy.

Read Professor Austin’s Article here.

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[acc_item title=”Student Debt: What We Still Need To Know, by Dr. Sandy Baum”]

What we think about student debt may be very different from what we know about student debt. And there is much more that we should know.  Framing the issues in a way that facilitates an understanding of the real problems, rather than just the startling headlines, is the first step toward solving the problem.  We should ask the right questions and work toward gathering the information we need to assure that student loans play a positive role in improving access to quality educational opportunities.  We should seek constructive ideas for mitigating existing difficulties rather than creating panic about a situation that is much more complicated than the headlines suggest.

Read Professor Baum’s Article here.

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[acc_item title=”Missing Data: Focusing on the Wrong Factors Could Contribute to Student Loan Distress, by Paul Combe & Julie Ryder Lammers”]

You get what you measure.  The federal government tracks data on student loans with an emphasis on total indebtedness and default rates, and as a result, those two data points are the main influencers of the policy debate surrounding student debt.  In order to change the focus of the discussion and to increase student repayment success, there must be a push to collect and publish data on the entire range of student loan repayment statuses, including delinquency, deferment, forbearance, and repayment.

Read the full article here.

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[acc_item title=”How Risk-Based Loans Would Help Students Achieve Better Outcomes, by Stephen Crawford & Robert Sheets”]

This Article [argues] that the widely recommended expansion of income-based repayment will not fix many of the federal student loan system’s serious problems, unless complemented by a more comprehensive income-based approach. Income-based repayment alone does not address the tendencies of students to over-borrow or under-match, the inclination of institutions to raise prices, or the likelihood loan forgiveness will become very expensive. The more comprehensive income-based approach that we propose incorporates the use of “choice architecture,” including variable, risk-based financial incentives that tie expected income to loan decisions throughout the loan cycle.

Read the full article here.

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[acc_item title=”Beyond Title IV: The Emergence of Private Student Loan Lending and a Profit-Driven System, by Justin A. DeAngelis”]

Private student loan lending is disproportionately concentrated among nontraditional students who often borrow in large amounts and borrow before exhausting other federal aid. Borrowers are facing increasingly aggressive collection efforts while receiving little in the way of advocacy or relief.  The continuing high default rates and the lack of meaningful repayment options raise concerns that lessons from the recent past have not been learned, as investor demand for SLABS has once again begun to grow.  Further regulatory reforms would protect investors from market instability and illiquidity caused by rising borrower defaults.

Read the full article here.

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[acc_item title=”State Variation of Student Loan Debt and Performance, by Wenhua Di & Kelly D. Edmiston”]

Most discussions about student loans have centered on national trends, but student loan debt and performance vary widely among borrowers and across geographic lines.  In this Article, we focus on the geographic variation of student loan debt and delinquency rates.  The purpose of this analysis is twofold.  First, a state-level analysis may shed light on consumers’ decisions to take out student loans and how to repay them.  While there is limited information available at the level of the individual borrower, looking instead at state-level data may reflect the circumstances individuals face.  Second, an understanding of how state-level support for higher education influences student loan borrowing and performance may inform student loan disbursement and repayment policies, as well as other higher education policy decisions.

Read the full article here.

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[acc_item title=”The Cost of Opportunity: Student Debt and Social Mobility, by Daniela Kraiem”]

Changing how we talk about higher education will not magically create legal and regulatory change overnight, but it will at least show that relying on student loans is not inevitable or unavoidable. It will lead us away from accepting that some students will be winners, while the rest will lose social mobility in a horrible gamble. It will open space for a regulatory framework that helps us to meet our collective goals: a vibrant, socially mobile society in which higher education leads to innovation, supports the production and preservation of knowledge, and ensures that all people have the tools they need to meet their full potential.

Read the full article here.

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[acc_item title=”Thought and Advocacy About Student Debt: Representation of Low-Income Borrowers in Law School Clinical Programs, by Ann Shalleck”]

Law school clinical programs offer an important site for examining multiple frameworks for understanding the complex phenomenon of student debt.  Student debt can be approached as an issue of consumer debt, access to education, economic mobility, or the nature of public responsibility for higher education, among other possibilities.  Each framework implicates different social and political institutions and related legal regimes.  Each framework prompts lawyers to think about different legal strategies and take different kinds of actions. Problems for low-income students are understood in different ways depending upon the framework used. Solutions get evaluated in different terms.

Read the full article here.

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