It is hard to find someone who, or some organization that, is not complaining about the high costs of higher education and the amounts that need to be borrowed to obtain a post-secondary degree. Repayment has become a key issue too, what with the misdeeds of the servicers. A New York Times editorial just addressed this, calling for change. Default rates and their meaning are being debated.
But, for unexplained reasons, the College Scorecard focuses primarily on educational costs, largely underplaying repayment. The first item that pops up (in green no less) in a Scorecard search of an institution is "Average Annual Cost" to the student and his/her family. "Costs" is the first heading on which one can click to find out more information post-search; "Academic Programs" are the last item one can click.
Yet, there is no button to click for "Repayment Options." Seriously.
Now the government is not alone in delinking borrowing and repayment. After conversations among various higher education groups, Lumina shared its proposal for borrowing guidelines (10% of income), with nary a word about repayment. The Foundation's focus was on how much debt families should incur at the front end.
Everyone - the Federal Government included - is making the same mistake here: borrowing is tied to repayment. That mistake is skewing the conversation and impairing the finding of solutions, including through the new College Scorecard. And, it is leaving the impression across our nation that student debt is out of control and we are about to experience a massive crisis.
Perhaps because I worked in the world of debt repayment, I see the link between incurring debt on the one hand and repaying it on the other; they are flip sides of the same coin. One could depict that on a Scorecard; it could be a quality visual image.
Instead of a borrowing crisis, I think we have a major repayment problem instead and deeply impactful information asymmetries. With sizable default rates (albeit slowing), repayment or lack thereof is affecting graduates and their families and those who have stopped out or dropped out. So are servicer bad acts.
Let me be clear as to what I am not saying: I am not saying families are not struggling. Far from it. I am not saying college is affordable. Far from it. I am not saying the student debt loads as presently handled are manageable. I am not addressing the quality/ value proposition in higher education. I am not parsing which debt is graduate and which is undergraduate. I am not focused on non-profit versus for-profit educational providers.
I am saying something very different. I am saying that the only way to think about "affordability" (cost) effectively is to factor into borrowing decision-making how repayment can occur and at what price.
And, I am asking loudly: Why did the Scorecard shy away from repayment option evaluation?
Significantly, students differ from each other, and there is no one-size-fits-all repayment program that works for every student in every situation. We also need to ask, based on the work of Sunstein and Thaler, which repayment options could become our "default" option (not as in non-payment but as in directed choice) that will help reduce debt.
It is known, I think, that there are a myriad of student beneficial repayment options, including income-based repayment and public loan forgiveness, along with deferral and forbearance. There is even the capacity to cure defaults and make steady payments for a year and eliminate the negative credit notation. REPAYE is on the horizon, although the jury is out as to how well it will work and whether it can substitute for other existing options.
Part of the problem is that students and their families are not learning about "back-end" options until it is too late. Default rates are higher than necessary because many folks default before they have explored their repayment options, assuming they even knew they existed from their servicers, among others. And, deciding among the repayment options or shifting from one to another is complicated and while improving, the government does not exactly have a stellar record at explaining these options effectively to graduates/former students. Just getting their attention has been hard.
So, how does the new College Scorecard approach repayment? Badly. Repayment is not on the first page. On page two, it is absent too. When you click into a search, under the box labeled "Financial Aid and Debt," there are data labeled "Typical Monthly Loan Payment." That repayment amount is the "traditional" payments on a 10-year Stafford loan (as best as I can tell.)
Then, on the far right, there are three links, one labeled in all caps: "TYPES OF FINANCIAL AID." This leads to a link the FSA website. On far right top of that site is a hyperlink titled "How to Repay Your Loans."
The College Scorecard would have been a perfect way to link debt incurred with repayment options. Picture an image of debt and repayment getting married, or at least linked. But, instead, the Scorecard focuses on institutions with high earnings ten years post-graduation, as if saying, "See, you will be able to repay your debt." (And, the numbers used are certainly subject to challenge).
The point is this: We shouldn't separate the front end and back end conversations about the costs of education. It is time to link borrowing with repayment at the front end. Then, and only then, will we be able to truly look at college affordability. Only then will we see if repayment options are sufficiently pro-student that they will in reality ease the burdens. Only then will we see if we are enabling education to be available to all who seek it - rich and poor, first gen and legacy students, traditional and non-traditional students (also which is changing), diverse and non-diverse students. Only then can we lower default rates in meaningful ways.
Perhaps it is not too late to change the College Scorecard. It offers an opportunity to message. So far, those messages haven't been optimal. I hold out hope for change though. It is better than being cynical.