Campus Progress Action, the youth-oriented advocacy program of the Center for American Progress, hosted a discussion yesterday on student loan policy. Interestingly, the event showcased certain similarities in educational ideas between AEI and CAP.
In her opening remarks, headline speaker Senator Kirsten Gillibrand (D-NY) concisely summed up the importance of the issue. High student debt makes students start their careers on shaky grounds, delays other important decisions like starting a family or buying a house, and stifles entrepreneurship. As Senator Gillibrand noted, in a country where small businesses create two thirds of new jobs, any stifling effect on entrepreneurship will have wide consequences. Combined, these problems ultimately act as a barrier to many aspiring middle-class students. Particularly now that student debt has surpassed credit card debt in size, and with rates set to double on July 1, the issue is more pressing than ever.
After Gillibrand’s introduction, the conference turned into a panel, with Campus Progress Action director Anne Johnson, Consumer Financial Protection Bureau Student Loan Ombudsman Rohit Chopra, and CAP Vicepresident of Postsecondary Education David Bergeron. The disparity between currently low market interest rates and the higher student loan rates was the dominant theme of the day. Starting from a Fed paper that argued that “barriers to refinancing blunt the transmission of monetary policy to the household sector,” the panelists presented refinancing as a cure to the current woes.
In addition to discussing ways to refinance student debt, the panelists covered useful but underutilized tools for students to limit their debt burden. Chopra, who has experience in this sector as CFPB Ombudsman, remarked that people are often unaware of possibly beneficial options like the Pay as You Earn Repayment Plan and the Income Based Repayment Plan, which could decisively help many striving students and graduates. Furthermore, he noted, there are often many obstacles in this not-always-clear process, highlighting the recurrence of lost paperwork and conflicting instructions when trying to find directions through the student loan maze. Interestingly, Andrew Kelly and KC Deane of AEI’s education team have also identified such plans as underused opportunities, noting that “income-based repayment is the best way to help overburdened borrowers get their payment controls.” When commenting on the lack of knowledge about such programs, they even suggested that it would have been more productive for Obama to devote his time talking about education reform to conduct an info session about Pay As You Earn and IBR.
The panelists addressed other hot-button topics, from Elizabeth Warren’s discount rate student loan plan to the increasing pace of student debt over the years. They dedicated their final moments to covering the inherent problems of college costs. More transparency looked like a clear necessity, with the panelists arguing for federal databases to allow prospective students to plan their academic choices in a more informed manner. Indeed, such a discussion echoed the recent debates about instituting a student unit record system. While some Republicans have opposed the idea as a system “designed to answer questions nobody is asking,” a bipartisan consensus is building that aims to correct what Andrew Kelly and KC Deane have called the informational asymmetry that “hides a lot of variation and, in some cases, failure to prepare students.”
While the panelists at times showed their deference to their progressive-leaning host, for example citing the simplistic #dontdoublemyrate Twitter campaign, they showed that certain initiatives there is a workable center from which to enact sensible reforms.