By David T. Boyd, MFA
“A man in debt is so far a slave” - Ralph Waldo Emerson
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On June 9, 2014, President Barack Obama signed a memorandum (Hudson, 2014) directing the Secretary of Education to propose regulations allowing 5 million federal direct student loan borrowers the opportunity to cap their student loan payments at 10 percent of their income. This memorandum also provided for new executive actions to support federal student loan borrowers, especially “vulnerable borrowers who may be at greater risk of defaulting on their loans.” Before continuing with this discussion, let’s take a moment to parse that statement for further clarity:• Per debt.org, to default on a student loan usually occurs after 270 days of non-payment, and since there is no statute of limitations on federal student loans, the obligation to repay them never goes away.
• Some consequences of defaulting on a student loan include being ineligible for additional federal aid or grants, damage to your credit report, garnishment of wages, seizure of savings and checking accounts, cancellation, revocation, or non-renewal of a professional license and withholding of state and federal tax refunds.
• Those considered most “vulnerable” in experiencing greater repercussions of student debt are women and minorities (Brand, 2013) for a variety of reasons, including higher instances of unemployment and disparities in earning power.
For these reasons, and many more, it is imperative that we have a system in place that safeguards students whose goal is to obtain a post-secondary degree that would hopefully lead to greater opportunity and prosperity. Instead, what we have seen is an increase in predatory lending practices, for-profit schools with poor job placement rates, risky private loans, and issues with accreditation that make it difficult for students to receive transfer credit. And while the U.S. Department of Education’s website discusses issues such as grant opportunities, loan forgiveness and accredited versus unaccredited institutions, it does not specifically address the disparities that affect students of color as they enter college.
The theme of this presentation is The Fallacies of Funding and the Failure to Fix Federal Functionality. The alliterative nature of this title is not by accident. The Department of Education uses FAFSA (the Free Application for Federal Student Aid) to determine how much funding prospective students need for college. They also require the Secretary of Education to publish a list of nationally recognized accrediting agencies deemed reliable authorities of educational quality and training by institutions of higher education. The DOE is failing our students by being complicit in making them “slaves” to a debt that should lead toward a prosperous life. Americans now owe more (de Vise, 2012) on their student loan debt than on credit cards or auto loans. And while everyone who applies for a loan to cover their tuition should be held accountable for their decisions, more needs to be done to protect those students who are vulnerable than issuing executive orders from the President of the United States. The DOE should become more intricately involved through changing their focus to preventive measures that can help ease the pressure and better streamline the process.
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FAFSA: A Brief Overview and 5-Year Strategic Plan
A. Mission: Funding America’s Future, One Student at a Time.
B. Vision: To be the most trusted and reliable source of student financial aid, information, and services in the nation.
C. Core Values:
1. Integrity – Do the right thing above other interests and hold everyone accountable.
2. Customer Service – Know what our customers want and ensure we meet their expectations.
a. Excellence – Strive to be the very best in all we do by embracing a culture of continuous improvement.
b. Respect – Value individuals by acknowledging the diversity of their contributions, ideas and beliefs.
c. Stewardship – Uphold the sacred trust of taxpayers as we work to support the goals of Congress and the Administration.
d. Teamwork – Work in collaboration with our colleagues and partners to produce the best possible results.
The 5-Year Strategic Plan for FAFSA is as follows:
A. Improve quality of service for customers across the entire student aid life cycle.
B. Proactively manage the student aid portfolio to mitigate risk.
C. Improve operational efficiency and flexibility.
D. Foster trust and collaboration among stakeholders.
E. Invest in expanded workforce capability.
Of the listed goals, the one that bears mentioning, in relation to this discussion, is Strategic Goal A, where over the next 5 years they intend on improving financial literacy, reinforcing sound budgeting techniques and providing a comprehensive overview of repayment options. They would also like to expand their outreach and awareness efforts through financial aid toolkits that are designed to assist guidance counselors, college access professionals and non-profits in explaining the process. While all of this is certainly a step in the right direction, communities of color have issues regarding acquiring loans that white students generally do not experience:
A. A 2010 study (Kerby, 2013) by the College Board Advocacy & Policy Center found that 27 percent of black bachelor’s degree recipients had student-loan debt of $30,500 or more, compared to just 16 percent of their white counterparts.
B. Sixty-nine percent of black students who did not finish their college degree cite the high cost of tuition, compared to 43 percent of their white peers.
C. Students of color take out private student loans at a higher rate than white students, making them more financially vulnerable to risky interest rates.
D. Students of color are more likely to enroll in for-profit schools, which account for nearly half of all student-loan defaults.
E. Youth unemployment (for those ages 16-24) is high among people of color, so the option to attend college appears viable. However, coupling high-interest debt with fewer job prospects increases the chance of defaulting on student loans.
F. The long-term impact of student debt in communities of color makes it hard to later obtain home ownership and a secure retirement. It can also affect entire communities, as well as the economy, which needs consumers in order to maintain its fluidity.
Despite the best efforts of FAFSA to integrate updated best practices within its agency, The US Department of Education needs to strengthen its efforts in educating students (as well as parents) about the entire college process, not just how to finance it. Believe it or not, there are other factors besides the principal amount borrowed or the interest rate that could become problematic when it comes time for students to repay their loans. Institutional accreditation is another facet of this multi-layered puzzle that could make attending college a costly proposition.
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Higher education accreditation (Littlefield, 2016) is a process that institutions and programs undergo to prove they meet acceptable levels of quality. This process is voluntary, but most schools choose to apply for accredited status as a way to regulate themselves and demonstrate that they meet minimum quality standards. In the U.S., you must attend an accredited program to be eligible for federal financial aid, most state aid, and even some scholarships. Although loan requirements can vary by financial institution, you may even need to attend an accredited school to qualify for a private student loan. Besides the regulatory and financial benefits, attending an accredited school or program can improve job prospects after graduation. A growing number of employers will not hire people who don’t have a degree from a recognizable institution. In addition, graduating from an accredited institution makes it possible to continue one’s education in the future, if the opportunity arises.
National versus Regional Accreditation
It is usually in this area where students often run into trouble, given that many fail to understand the difference between National and Regional Accreditation as they are making college plans. The US Department of Education (Peterson’s, 2015) does not accredit institutions; instead it determines which accrediting agencies receive recognition by the Department. This means that the standards of the accrediting agencies are “up to par” to the standards of the DOE, which limits its recognition to accrediting agencies that endorse schools that need the recognition to participate in federal programs, like FAFSA. While this recognition is critical, there still exists a disparity between the types of accreditation that could end up costing students thousands of dollars in loans and grants. The two accrediting agencies (Littlefield, 2016) recognized by the DOE can have a national or regional scope.
A. National – agencies that accredit institutions or programs across the United States. These agencies typically focus on a specific type of education, such as technical, vocational or distance learning. These agencies are typically reevaluated every 3-5 years to ensure they remain up to the standards of the Council of Higher Education Accreditation.
B. Regional – six bodies that award regional accreditation are recognized by the US Department of Education and the Council for Higher Education accreditation. Typically, these six agencies are composed of traditional academic colleges and universities. They are:
1. Middle State Association of Colleges and Schools.
2. New England Association of Schools and Colleges.
3. North Central Association of Colleges and Schools.
4. Northwest Association of Schools and Colleges.
5. Southern Association of Colleges and Schools.
6. Western Association of Schools and Colleges.
If a student earns an undergraduate degree from a college that does not belong to an accreditation bureau accepted by the graduate program they are applying to, their ability to be admitted might be difficult or impossible. Similarly, if a student wants to transfer credits from a nationally accredited college into one that is regional, that could prove to be problematic. This could also cause unforeseen issues regarding federal student aid. Why is this important? Consider the fact that the Federal Pell Grant, a need based grant, has a limit of 12 full-time semesters where it provides tuition assistance. If a student is transferring into a college that doesn’t accept credits from the school they are coming from, they will be unable to recoup any of those 12 semesters and might have to repeat certain classes. If they didn’t receive the Pell Grant, but received federal student loans, those loans must be paid in addition to whatever else they borrow. Students who have a clear understanding of the overall college process will undoubtedly go into this experience ready for the multitude of challenges that await them; but for those students who are unaware of the varying nuances, a simple mistake as misunderstanding how accreditation can limit flexibility could haunt them for years to come. And given the fact that women and students of color make up most of those affected by predatory lending, defaulting on high-interest loans, attending for-profit colleges and lack of knowledge in regards to accreditation disparities, it is in the best interest of the US Department of Education to do whatever is necessary to provide relief for the vulnerable among us. By utilizing a bottom-up approach, a wide-reaching solution could decrease the pressure at every juncture and provide lower expenses for graduating college students.
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that the United States funds higher education." – Senator Bernie Sanders
Turning those “F’s” into “A’s!”
Applying to post-secondary institutions of higher learning is not just about choosing schools, completing applications and sending transcripts. Because of the high number of quality schools that exist today in the United States, as well as the ability of most prospective students to obtain access to these schools, the decision making process must include not just the school itself, but also things like financial assistance, understanding loan interest rates and the consequences for non-payment, scholarship opportunities, rules regarding accreditation and the ability of students to transfer credit and how certain populations in our society are victimized. These are areas where everyone involved could benefit from increased levels of awareness, and it is imperative that those who are considering the idea of an education – no matter what their area of interest might be – have a clear understanding of their role as a consumer and participant in the process, to do their due diligence and conduct thorough research before agreeing to anything. However, all matters that involve a regulatory body, like the US Department of Education, must continue to evolve in how they reach the varying needs of a diverse population. It cannot be assumed because a regulatory body exists that everyone will receive and internalize information in a similar fashion. Socioeconomic differences often determine who receives this information first, leaving those who are not accustomed to making such decisions to fend for themselves. The novel The Spirit Catches You and You Fall Down by Annie Fadiman explores communication problems between a county hospital in California and a refugee family from Laos who clash over a Hmong child named Lia, who suffers from severe epilepsy. While both Lia’s parents and her doctors want what’s best for her, because neither side was able to communicate with one another, Lia ended up becoming brain dead by age four after numerous medication changes, misunderstandings and clashes in culture. This is where we are as a society regarding all students (especially women and students of color) whose desire is to obtain an education that offers both quality and affordability. We can provide 5-year objectives that help address the issue, but without being able to match the need with proper communication to a diverse population, this process will only get worse.
Here are a few suggestions that could help:
A. Students should be required to complete an online certification prior to accepting financial aid products. In other words, after a student has applied to FAFSA, they must sit for an online review of their benefits, with complete explanations of their package that is interactive and requires the student answer questions prior to receiving their benefits. A transcript of the workshop, as well as other items on the student’s to-do list, can be accessed in their account or emailed to them directly.
B. The US Department of Education consider recommending to National and Regional accreditation bureaus that foundation courses (English, Math, Sciences, Liberal Arts and certain technical curriculums) be transferable, thereby making it automatic for students to earn credit for general coursework taken at colleges where the accreditation doesn’t always match.
C. Attempts to obtain data from vulnerable communities as to what could be done to increase knowledge of the overall college admissions process. Specifically, this means what methods specific to a given community could agencies like The US Department of Education employ to fill in the missing gaps.
D. Encouraging more Public Private Partnerships (PPP) where the DOE works with groups that engage directly with civic groups, churches, fraternal organizations, and CBOs who promote educational opportunities for students. Not only would this get the message across, it also provides training and credibility among those who live and work within the community itself, thus relieving pressure from a government agency to provide these services.
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Marcus Aurelius once said “To understand the true quality of people, you must look into their minds and examine their pursuits and aversions.” As a nation that prides itself on liberty and the pursuit of happiness, if we fail in the aggregate to understand the unique needs of our citizens and how to streamline our process so education can be affordable to everyone, we may never understand or benefit from the potential that lies within our fellow countrymen and women. Complicity in bankrupting our people before they’ve had the chance to contribute to our society is unacceptable. However, making the effort to do what is right for the least among us makes everything righteous for all of us.
BIBLIOGRAPHY
Books
Annie, F. (2012). The Spirit Catches You and You Fall Down: A Hmong Child, Her American Doctors, and the Collision of Two Cultures. Farrar, Straus and Giroux.
Websites
Hudson, D. (2014, June 9). Whitehouse.gov. President Obama: "No Hardworking Young Person Should Be Priced Out of a Higher Education". Retrieved December 10, 2014, from https://www.whitehouse.gov/blog/2014/06/09/president-obama-student-loan-debt-no-hardworking-young-person-should-be-priced-out-h
Brand, M. (2013, May 1). The Huffington Post. How Student Debt Affects Women, Minorities | U.S. News And World Report. Retrieved December 10, 2016, from http://www.huffingtonpost.com/2013/05/01/student-debt-women-minorities_n_3193661.html
Kerby, S. (2013, May 16). The Center for American Progress. Borrowers of Color Need More Options to Reduce Their Student-Loan Debt. Retrieved December 10, 2016, from https://www.americanprogress.org/issues/race/news/2013/05/16/63533/borrowers-of-color-need-more-options-to-reduce-their-student-loan-debt/
Littlefield, J. (2016, August 26). About Education. National Versus Regional Accreditation. Retrieved December 10, 2016, from http://distancelearn.about.com/od/accreditationinfo/a/bestaccredit.htm
(2015, October 7). Petersen's. Understanding Accreditation of U.S. Colleges and Universities. Retrieved December 10, 2016, from https://www.petersons.com/college-search/us-colleges-universities-accreditation.aspx#/sweeps-modal
De Vise, D. (2012, May 6). The Washington Post. Student loans surpass auto, credit card debt. Retrieved December 10, 2016, from https://www.washingtonpost.com/blogs/college-inc/post/student-loans-surpass-auto-credit-card-debt/2012/03/06/gIQARFQnuR_blog.html?utm_term=.6fa64b826b81
