I watched a piece on the Today Show yesterday morning, and they interviewed a group of young people. They said, “Everyone graduates with debt.” Not true. Many do, but definitely not everyone. I am not well off, but my kids did graduate without debt. The other thing they said: “Debt should be forgiven.” Why? I just don’t understand how that makes sense. Borrowers BORROW. Which means that borrowers must PAY BACK what they borrowed.
I am all for income-driven repayment (IDR) plans, and I am definitely for requiring servicers to do a whole lot better servicing loans. I work in financial aid, and I have assisted numerous students who have received horrible advice and service from their servicers.
I am all for lower origination fees. The 4+% origination fees on PLUS loans are a huge consumer ripoff. You don’t get that 4%, but you repay it (with interest, which begins to accumulate when the loan is disbursed).
I am all for better entrance counseling in advance of borrowing, and I believe the responsibility for developing this rests with the Department of Education. They have the resources and data to be able to put together the best possible entrance counseling, which should include financial literacy-type information. Maybe students would decide not to go to a too-expensive school BEFORE they begin if they had to face the reality of what they were doing before they borrowed loans.
I am all for anything to help curb borrowing that does not add more burdensome regulatory requirements on schools. The amount of time it takes me to comply with regulatory requirements has drastically increased in the last 10 years. In my case, it means I work more & more hours … in most schools, it means more staff has to be hired (which leads to higher tuition, which leads to more borrowing).
Most of all, I wish students and parents would embrace the idea that no one “deserves” any particular school if going to that school will put you in a terrible financial position for years to come … and if there is an alternative that costs less.