The U.S. Department of Education has agreed to consider amending the regulations governing repayment of student loans. According to Lauren Asher, assistant director of the Project on Student Debt, an interest group, current standards do not take into account the income level or family obligations of the borrower. These are two factors that interest groups feel are important in a graduate's ability to repay a loan.
Beginning Dec. 12, the Department of Education will be meeting to discuss possible changes as part of a new "negotiated rule making" initiative, according to Asher. The ultimate goal is making sure that college is affordable to graduates that enter fields with a variety of income levels, Asher said.
Asher said she has been intensely involved in the movement for changes in the financial system. The Project on Student Debt has proposed a five-point plan that would limit student loan payments, take into account family size, protect students from high interest rates, cancel remaining debts after 20 years of regular payment and simplify the application process for loans. They have joined forces with a diverse coalition of organizations to back this plan.
"The goal is to make it a straightforward process, so people can meet their obligation and still put food on the table," Asher said.
The Project's concern is that with such high interest rates involved with the borrowing process, there is a lot of uncertainty for college students. They want to make sure that everyone has an opportunity for education, Asher said.
When the Department of Education agreed to look at possible changes, the group viewed the decision as a huge victory and looks forward to tracking the negotiations in the coming months, ultimately leading to a change in legislation, Asher said.
"This is wonderful," Yvonne Hubbard, director of student financial services, said. "It is making college affordable and predictable."
She agreed with the necessity of changes in the financial system. U.Va. has taken steps to help control interest rates and insecurity in the borrowing process through the Access UVA initiative. This program offers only a limited amount of loans.
"It is not just about what the institutions cost, but the price includes interests as a part of costs," Hubbard said.
As the Department of Education begins its negotiation, Asher said the coalition behind the five-point plan believes there is opportunity for security to be brought back into the loan process.
David Breneman, dean of the Education School said while he supports the review of student debt by the Department of Education, the position of loan lenders should be considered.
If interest rates are scaled back there could be a possibility that some sources of supply will dry out, Breneman said.
"There has to be enough in it for lenders to make it worth their while to make loans available," Breneman added. "Like all things in life, there's no black and white."
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