Honoring the Letter and Spirit of Federal Student Aid

Abstract

Outstanding federal student loan debt topped $1 trillion in 2012,¹ and rate of payment on existing federal student loans dropped 8 percent from just five years earlier,² prompting many comparisons between the perilous ballooning US student debt and the devastation resulting from the subprime mortgage crisis that rocked the country in the mid-2000s. Student debt, however, is in some ways more dangerous than housing debt, because it cannot be as easily refinanced and, as legislated by Congress in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, except under extremely rare circumstances cannot be discharged through bankruptcy.³ In an article covering ballooning student debt, the authors noted, “While there are standardized disclosure forms for buying a car or a house or even signing up for a credit card, no such thing exists for colleges.”⁴ Nevertheless, demonstrating strong commitment to the national completion agenda, the federal government continues to issue record numbers of grants and loans.