My friend George

If you’re reading this, you probably heard of the passing over the weekend of George Chin.  And if you’re reading this, you most likely knew George, perhaps for a long time, or at the very least you knew of him.  I don’t know how many practicing financial aid professionals there are in the country, must be well into the tens of thousands, and I know that every single one of them could play about two degrees of separation with George Chin.  There is no [fill in some letters]ASFAA not filled with people who have learned, directly or indirectly, but likely directly, from George.

George long ago earned rank into any financial aid old boys/girls network, if such a thing exists.  But that wasn’t George’s style.  In every financial aid association (and similar groups), the “how do we develop new leaders, what is it with these younger members, they just don’t care like we do” conversation takes place over and over again – usually among the veterans who won’t get out of the way and let the younger members move into positions of leadership.  George was always the one who recognized that the only way to get younger members involved was to invite them, to encourage them, to empower them.  My initial foray into any type of association involvement or leadership was in the late 90’s when George was the new EASFAA president, and he asked me to co-chair the Training Committee.  Nowadays, I’m one of the, uh, more mature members of the community who tries to encourage young’uns to broaden their horizons in the ways he encouraged me.

But George influenced my career in other important ways too.  We all learn financial aid in the weeds, from sweating the details.  Then we go to conferences and listen to federal updates and similar sessions and see a much broader perspective.  It would all sound like distant, detached government speak until someone like a George Chin would get up and tie it all together…that this grunt work we’re doing in our offices, one calculation, one email, one aid package, one student at a time, was all part of an important public policy decision that dates back generations by now…that America will be a stronger country if higher education isn’t just for those fortunate enough to have it all paid for without a worry by affluent parents. Financial aid exists not to give number crunchers some busy work, but to lift people out of poverty and into better lives.  It was George who inspired me to look at financial aid not just as helping one student at a time but also as public policy.  I would never have chaired federal relations committees, submitted written testimony to Congress, served on Negotiated Rulemaking committees or gotten involved in similar career highlights were it not for George.  And everyone who sees me step up to the microphone as soon as a presenter says “OK, we’ll open it up to questions now” and thinks to themselves “great, him again” has George to blame…or I would prefer, to thank.

But more important that the influence he’s had on the financial aid path I’ve chosen is that it’s been people like George who have kept decision makers – members of Congress, members of advisory committees, Department of Ed officials, and all of his colleagues – honest by reminding them what we’re doing this for.  Not for ourselves, not for our schools, but for students who are going to make this a stronger society by being better educated.

Our best tribute to George would be to encourage our colleagues to embrace their important roles in this thing we call financial aid and in all of the ASFAA’s, and to keep that pressure on those decision makers, now more than ever.  Rest in peace, my friend, our friend.

Now What?

I’m big on weekly to-do lists, there’s always one on my desk, typically on a white legal pad, and as I think of things that have to be done 2-3 weeks out, I scribble them down on a subsequent page. Included in the week of November 7 to-do list is “EASFAA blog – PSLF? DTR?”  I’m a loudmouth champion of PSLF, and DTR – Defense to Repayment – has been generating lots of chatter lately, and as I was on the Negotiated Rulemaking committee that worked with ED to create it, I figured either of those would be good topics to write on.

Yeah, maybe some other time.

Chances are that most of my colleagues who will read this are as stunned by the results of the Presidential election as I am; the ramifications are many and far-reaching, and there’s no point in discussing all of them in this forum (meet me at a bar and we can talk all night). But what will it mean for families who need financial aid?

Trump the candidate did not make college affordability a major theme of his campaign. There was a brief chat about returning student loans to the private sector (although whether he meant the FFEL model or removing the federal government from the student loan business completely was unclear) and tweaking existing income-driven repayment plans.  As is often the case with Republicans, there was talk of dismantling or shrinking the scope of the Department of Education and detail-free discourse about lowering college costs.  A little-known surrogate supposedly advising him on education policy made comments about how nonsensical it is to give students financial aid to study such silly things as English or History or Psychology or anything else that isn’t specifically designed as job training (I’ve always figured that if those fields were called Conservative Arts instead of Liberal Arts, the right would be far more supportive).

As I write this, Trump trails Clinton in the popular vote and can’t really be said to have a sweeping mandate, especially in a campaign in which “policy” was discussed at only the most superficial level. That said, I can’t be dishonest and say that I’m not worried about how the ugliest parts of his campaign seemed to swing the election.  The forces that Trump rode into town on hardly seem friendly towards helping those less fortunate, they have demonstrated no concern about social justice, and they view American higher education as a bunch of liberal elitist eggheads at best.  It’s not a stretch to predict that the years coming up will not be easy for students and families who need our help.

Those of us who have been in the business for, well, a long time, remember the Reagan years. They weren’t rosy.  Aggregate undergraduate loan limits were lowered midstream, forcing many students to leave school because their senior year loan was eliminated during their junior year.  We were introduced to verification and origination fees, two banes of both students’ and aid administrators’ existence 30 years later.  Costs rose and the Secretary of Education foolishly said that they were rising thanks to Pell Grants, even though there were years in which Pell awards were reduced.

Yet students kept going to college, and we were able to continue to help them. Innovations emerged, many of us found new ways to do things.  Wiser men than I have said that necessity is the mother of invention (cue “Peaches En Regalia,” and bonus points to anyone who gets that reference).  As a man much less wise than Plato (that would be me) has said, 2+2=4, but so does 3+1.  Maybe the blessing in disguise is that our profession will be forced to muster up new creativity and find new ways to help students.

In the meantime, traffic is probably getting busy along the I-95 corridor northbound through Maine. New Brunswick, Nova Scotia, Prince Edward Island…all lovely places.  You might be able to beat some of the traffic by taking Route 1, or try Route 3 through New Hampshire into Quebec.

Is There a Student Loan Crisis?

It’s become hard to pick up a newspaper (oops, age is showing) or go to a news site and not see an article about lives being destroyed by student loans or that they represent the new bubble that will soon burst. The citations are familiar: over a trillion dollars in student loans; low repayment rates among underemployed graduates; they’re responsible for tuition inflation (don’t get me started); Millennials who borrowed $250K to earn a PhD in 19th Century Greenlandic Philosophy and are now making pretty designs with the milk on cappuccinos at an artisan coffee shop in Bushwick.

That’s all much better click bait than “Student Loans Help People Continue Their Education and Lead Better Lives. And Most Borrowers Repay Them OK.”

Those who attended the NASFAA conference in 2015 will recall that when the question that gives this entry its title was put up for a vote and the “no” vote won, the backlash was swift; student loan activists who are struggling with their debt accused our profession of being some combination of oblivious, uncaring, greedy, and in general, the face of the problem. Many attendees voted yes, we do have a student loan crisis, but as the only response choices were yes and no, it perhaps obscured the thoughts of many that perhaps many individuals have their own student loan crises, but the nation does not.

Student loans have helped generations of students earn degrees that have led to higher paying careers and better lives. Even during periods of high default rates, most borrowers satisfactorily repay, and the current average debt of about $29,000 is only slightly more than I just spent on a Subaru. And no one has said the economy is going to collapse because of all of these Subarus.  A good education is a good thing to have, in our country it costs money, and student loans have been providing some of that money for decades.  Crisis?  Not if they’ve helped so many people.

So maybe yes/no is a matter of semantics, but that might be weak argument in an environment in which many have been promised a better life by continuing their education, only to see it all go wrong, with misrepresented claims, closed schools, no degree or career advancement, but plenty of student loan payments due. To someone who borrowed thousands of dollars for a bill of goods that turned out to be false but still carries burden of that debt, they’ve got a crisis on their hands no matter what meta-statistics anyone can cite.  Public opinion and public policy should both be formulated by facts and data, but we all know that they are too often informed instead by anecdotes and headlines.  If lots of people have very negative experiences with student loans, even if they’re in the minority, it can do irreparable harm to the program moving forward.

Where does the truth lie? What role do financial aid professionals play?  Are we subjecting a generation to too much debt?  What can we do to make sure that sensible borrowing remains – or becomes – the norm?

2+2=4, But So Does 3+1

Many people are concerned about excess government spending.  Now, given the way politicians talk in code, when they say “reduce government spending,” I often find it means “I don’t want the government spending money on this program, I would rather that money (or even more) be spent on this program instead.”  But it’s reasonable to say that no entity – governments, businesses, families, individuals – should spend too much money, and that would be because, as we have learned at various times of our lives, money is among the things that does not grow on trees.  I suppose that gives us license to spend plenty of grapefruits or oak leaves or walnuts, as they do grow on trees.

So one would think that if the government was doing just the opposite, that would be a good thing.  The opposite, seems to me, of spending money, is making money.  So if the government spending money, or at least too much money, is a bad thing, wouldn’t the government making money be a good thing?  Well, maybe yes, maybe no.

According to a recent article in the Chronicle, the federal government will be pulling in $66 billion – that’s billion, with a B – from federal student loans made between 2007 and 2012.  Or $41 billion in profit in 2013 alone.  There have been estimates that the next decade will bring in a profit of $185 billion.

On one hand, there aren’t many government spending programs that result in Uncle Sam showing black ink in the ledger, let alone ones that for 50 years have helped education millions of Americans so they can have better careers and futures.  Programs that spend money but also make it can move towards self-sufficiency, so that at some point, it doesn’t cost taxpayers a dime.  Or the money can be used for something else, hopefully related, such as Pell Grants, so that maybe students and parents don’t have to borrow as much to begin with.

But then there’s the point of view being very clearly expressed in articles such as one recently published in USA Today.  They reported that “Student loans…continue to churn profits into the federal government’s pockets.”  Not exactly worded as an endorsement.  The article quotes a student loan borrower who is described as “steamed” about the government’s cash register going ka-ching while she’s struggling to repay, and then turns to Massachusetts Senator Elizabeth “Colleges Should Have Some Skin in the Game” Warren, who has been hinting that it’s not just the feds making too much money off of student loans.

So where does the truth lie folks?  Does the lender making money create a sustainable system that assures future funding for those who need it…or does it mean
that borrowers are being soaked?

2+2=4, But So Does 3+1

I once had a letter to the editor published in the Chronicle about how punishing schools for loan defaults is misdirected policy.  No matter what counseling we provide, we can’t make borrowers pay that student loan bill on time every month.  Washington was abuzz with suggestions on how to hold schools’ feet to the fire as an effective means of reducing student loan default.

Except when I wrote that letter, Ronald Reagan was President, women wore big hair and men wore Members Only jackets, Madonna was young and shocking, and my New York Mets were the best team in baseball.  Because it was the mid-80’s.  So how far have we come, as all reliable sources tell me it’s almost 2014?  Suggestions on how to hold schools’ feet to the fire as an effective means of reducing student loan default.  Or as Senator Jack Reed of Rhode Island (a one-time EASFAA Conference keynote speaker, I’ll have you know) said, colleges “will have to have skin in the game.”  Maybe Senator Reed would benefit from checking how much skin we have left.  Institutes of higher education can already face penalties up to and including removal from Title IV participation for high loan default rates, which has caused some to close up shop.  Schools have dealt with – and paid penalties for – audit findings for not just failing to provide proper entrance and exit counseling for borrowers, but even just failing to properly document doing so.  Attempts to convince lawmakers that financial aid professionals should have the authority to deny or reduce a loan they feel is excessive or unnecessary fall on deaf ears.  Numerous products and services to teach students about financial literacy (because many have absolutely zero) may be very high quality products and services, but have you had success getting students to pay attention to them?  What else can we do on our campuses to prevent loan defaults?

I wish I were a Senator.  In my job, when I see a problem, I need to a) make sure that it is a real problem, b) determine what the real cause of the problem is, and c) identify and implement a solution.  How well I do this is my skin in the game.  If I were a Senator (or a Congressmen, they work the same way), it would be much easier.  Then I could a) misinterpret the root of the problem, b) propose punishments on those who my limited knowledge and research tell me are responsible for the problem, and c) offer no solution whatsoever…even say “no” when experts offer real solutions.  No skin in the game for Senators.

So what is the solution, according to Senators Reed, Durbin and Warren (and that one really hurts…I see Elizabeth Warren as Presidential timber…)?  Financial penalties to schools based on their default rate.  Money would be used for, uh, student loan “delinquency and default prevention or rehabilitation.”  So give money to the federal government, and they’ll fix it.  Except if they know how to fix it, why haven’t they already fixed it?  Will they only be able to fix it if they collect money from colleges?  And how will the colleges get the money to pay these fines?  Uh, by raising tuition?  Which will lead to more borrowing?  Which will lead to…gosh, how ironic.

You want fewer student loan defaults?  Have you considered stronger grant programs, less confusing repayment options, more uniform and effective servicing procedures, and (I know this is a reach) a healthy economy for all Americans (not just the 1%) with real job growth?