An unexpected evacuation of the Rayburn Building may have cut short the time, but not the spirited debate at a Capitol Hill policy event on student loan borrowing this month. The event, Helping Struggling Borrowers and Fixing the Federal Student Loan System, was jointly sponsored by the Aspen Institute, Bipartisan Policy Council and Consumer Bankers Association.
Jeff Andrade, the McKeon Group’s expert on postsecondary education and workforce issues, participated on the first panel with Tiffany Jones of the Education Trust, and former staffer to Senator Elizabeth Warren, Julie Margetta Morgan of the Roosevelt Institute, which was moderated by Katherine Lucas McKay of the Aspen Institute.
Andrade took issue with the current media coverage on student loans, noting that both the $30.000 average debt for undergraduates and corresponding payment of $320 per month is manageable for the majority of undergraduate borrowers at the starting salaries for recent graduates. “Student loans get a bad rap,” he said, “The fact is they can be a very effective tool because they allow you to borrow against future income and by borrowing against future income, [from both an inflationary standpoint and having new skills and credentials] you are using tomorrow’s dollars to pay yesterday’s expenses.”
He also called attention to the negative consequences of the Obama-era income-based repayment plan which have disconnected the monthly payment from the amount borrowed, and actually add to borrowers debt because the payments fail to pay off the interest that accrues on loans. “They essentially turned the federal government into a loan shark with income-based repayment.” He noted that the two key areas that policymakers should focus on is the proliferation of graduate students who are incurring debt for degrees that do not have a corresponding higher return on investment and dropouts who are being pursued for debts in excess of their actual market value.