It’s no secret that many U.S. college students have been defaulting on their loans or simply find them very difficult to pay back. The burden of student debt has become somewhat of a go-to bitter joke, with the issue making an appearance on virtually every TV show or movie about young adults. Today, Americans have a better sense of just how many students have failed to pay even $1 on their loans.
A memo recently released from the Education Department showed that half of the students at over 1,000 colleges defaulted on their loans within the last seven years. This sharp increase from the numbers previously released by the Education Department has reawakened calls for reforming this federal department.
Student Debt Is A Bigger Issue Than Previously Imagined
When analysts at the Wall Street Journal looked into these new numbers, they found that the Education Department inflated repayment rates by 99.8 percent from their last report. Previously, the Education Department said only 347 colleges experienced a loan default rate of 50 percent or more, but now that has increased to 1,029. The original numbers were released back in 2015 under the Obama administration’s watch.
Students on the 2015 report were supposed to start repaying their loans between 2006 and 2007. Those numbers were the first officially released numbers on the “College Scorecard” set up by the Obama team. After the 2015 numbers, there was a second batch of statistics released in September. This data showed a rise from 347 to 477 colleges with loan defaults 50 percent or higher.
The second report included students who were supposed to pay back their loans in 2007 or 2008. Although 477 is a sharp rise from 347, it’s nowhere near the jump from 477 to 1,029. The Education Department is blaming this change in numbers to a technical programming error.
One of the worst schools on this list in terms of loan repayments was the University of Memphis (U of M). Over the past seven years, the loan repayment rate for the U of M was 47 percent after recalculation. Officials at the U of M said they were shocked by the revisions and vowed to change how they collect their data. The U of M’s official statement said,
Given the magnitude of the numerical changes in the report,…the University of Memphis will be challenging the accuracy of the newly adjusted data.
Although the U of M saw one of the greatest revisions, no college or trade school had better repayment rates after the recalculation.
Calls For Reform From D.C.
While this recalculation was extremely embarrassing for the Education Department, this wasn’t the first time the department has publicly failed. One government report released not too long ago critiqued the Education Department’s method of tracking information. In particular, this report scolded the Education Department for looking at the budgetary aspects of student loan forgiveness.
Some higher education experts believe this history of unreliable data coming out of the Department of Education is a quality control issue. Robert Kelchen, who works as an assistant professor of higher education at Seton Hall University, told reporters that the Department of Education “needs to be regularly audited” in order to avoid these embarrassing issues.
Can President Trump Change Loan Policy?
There’s some talk in Washington about making schools accountable for low loan repayment rates. It’s unclear at the moment whether or not a Trump administration will attempt to punish colleges if their students cannot pay back their loans.
On the campaign trail, Donald Trump said he would work to cap annual student loan payments at 12.5 percent of a student’s income. President Trump also said that all outstanding loans should be forgiven after 15 years, in an effort to reduce the overwhelming burden of student debt. There are now at least 44 million Americans with a total of $1.4 trillion in student loans.