Is College Affordability the “Sleeper Issue” of 2008?
By Pedro de la Torre - Sep 17th, 2008 at 5:11 pmThe National Education Association (NEA) released a poll today that demonstrates that college costs are a major issue in the 2008 election for voters in general, and particularly so for parents, students, and Latinos.
The poll results indicate that anxiety about college costs (which have risen 375% since 1980) is one important source of the general economic malaise that is frequently cited as the primary concern for primary voters. The public is worried both about the economic toll that a college education takes on young people and their families, and about how college costs may harm American competitiveness in the global economy.
A college education is increasingly seen as an economic necessity, and 39% of those surveyed said that they had to make significant sacrifices that affect their quality of life so that they could afford a college education for themselves or a family member.
The survey also found that there is broad support not only for the federal government to play a substantial role in making college affordable, but also for every college affordability policy that was included in the survey: lower tuition rates, income-based student loan repayment plans, free community colleges, making all student loans interest-free while a student is still in school, increasing the Pell Grant, expanding the direct loan program, providing loan forgiveness to those who take on careers in public service, and preventing credit bureaus from penalizing students who shop around for the best rate on student loans.
I think Preston Mitchum’s “I’m Voting For” video testimonial sums up why so many people want to see action on this issue:
I read the article and the polling memo and did not see any reference to direct loans made by the U.S. Department of Education.
Do your homework: FFELP is now cheaper than Direct Loans.
September 18th, 2008 at 12:42 pmActually, the question of whether Direct the direct loan program or the FFELP is more expensive for taxpayers is up in the air:
“…each program currently serves different sets of schools and different sets of borrowers, and this affects each program’s costs. For example, defaulted borrowers are disproportionately placed into the Direct Loan program, adding costs especially to consolidation loans in that program. If Direct Loans were eliminated, those default costs would remain in FFEL. In addition, a new Public Service Loan Forgiveness benefit is only available in direct lending. If Congress decided to eliminate direct lending, presumably the new forgiveness benefit would be preserved, shifting those costs to the FFEL program.”
One of the many questions regarding specific policies asked in the survey was indeed about direct lending, although I suppose it did not make it into the memo.
September 18th, 2008 at 1:17 pmDefault costs are just one part of the total cost picture.
On every type of loan except consolidated loans (i.e., subsidized Stafford, unsubsidized Stafford and PLUS, FFELP’s lifetime default rates are lower than DLs.
The fundamental issue really is this: whether students, parents and schools are better off over the long term with a strong private sector-based program?
If one thinks that government contractors supervised by government employees under five year contracts would do a better job than lenders (that compete for business) in serving students and schools and do a better job introducing new innovations that make the borrowing process easier, cheaper and more efficient, then we have a fundamentally different world view.
September 18th, 2008 at 4:04 pm