Federal Student Loan Effectiveness: Part 2

Should the federal student loan system be modified? Can its accessibility and effectiveness be improved?


There is no doubt that student loans are not ideal for borrowers, and the less debt the better for the students. However, this does not mean that large-scale change in the federal loan program is necessary. The Free Application for Federal Student Aid (FAFSA) verification process is certainly in need of improvement because of its logistical difficulties and unnecessary complications. Because students, especially low-income students, are potentially making their decisions on attending and graduating from college based on this process, it is logical to make it as efficient and simple as possible.
Furthermore, indexing the Pell Grant amount to inflation is a simple and effective way of controlling for the natural inflation in the United States economy. However, additional spending (e.g. increasing the amount past what it becomes with inflation) is not recommended. The United States already spends more money on education per student than any country besides one and expending more resources on the Pell Grant program would drastically increase this figure. Since there are 6.8 million Pell grant recipients, increasing the maximum grant amount to $10,975 (which is half of tuition at a 4-year public school) would result in an 81% increase in spending1 on the program. This translates to an additional $22.7 billion, which is more than the United States government can spare. For comparison, President Trump requested just $1.9 billion to be redirected from Pell Grants to NASA for a new moon trip, and the entire Department of Education budget for 2020 is $72.7 billion. There is simply too money required for a plan of this magnitude to be feasible, especially under this administration which has proposed an 8.5% reduction in education spending for the upcoming year.
              Finally, the Public Service Loan Forgiveness (PSLF) program should be eliminated. Although the idea of aiding public service workers may seem like a good one, the system has proven to be highly inefficient. Since March 2017, when the first people became eligible to receive forgiveness, just 1,216 applicants out of 110,729 (1.10%) have been accepted for their loans to be forgiven. The program has many requirements that are confusing and inconvenient, so many people do not realize they do not qualify for forgiveness. The Republican budget proposal for the upcoming year would eliminate the entire program, reducing the amount of repayment plans. In addition, it consolidates student loan repayment into a single income-based repayment plan. This would not affect those who could potentially still use PSLF (if they somehow manage to get accepted), just future borrowers.
              Although there are certainly issues with the current federal student loan system in the United States, there do not necessarily need to be drastic alterations. Minor adjustments such as simplification of the FAFSA system and indexing the maximum Pell Grant amount to inflation should significantly improve the experience of incoming and former college students alike, while conserving the government’s overall spending on education.


1This is assuming that the ratio between maximum amount and average amount stays roughly the same as it is currently.

Works Cited

"Fiscal Year 2021 Budget Summary." U.S. Department of Education, 2020, www2.ed.gov/about/overview/budget/budget21/summary/21summary.pdf. Accessed 17 Feb. 2020.

Friedman, Zack. "Trump Calls For End To Student Loan Forgiveness Program." Forbes, 11 Feb. 2020, www.forbes.com/sites/zackfriedman/2020/02/11/trump-student-loans-forgiveness/#6913897b6b3d. Accessed 17 Feb. 2020.

Nykiel, Teddy. "Public Service Loan Forgiveness: What It Is, How It Works."
     Nerdwallet, 1 May 2019, www.nerdwallet.com/blog/loans/student-loans/
     public-service-loan-forgiveness/. Accessed 6 Aug. 2019.

"Pell grants: recipients, maximum Pell and average Pell." College Board, 2019, research.collegeboard.org/trends/student-aid/figures-tables/pell-grants-recipients-maximum-pell-and-average-pell. Accessed 17 Feb. 2020.

 Tucker, Marc S., editor. Surpassing Shanghai: An Agenda for American Built on the World's Leading Systems. 2nd ed., Cambridge (MA.), Harvard Education Press, 2011.


Comments

Post a Comment

Popular posts from this blog

Criminal Justice Data Analysis

Image
Can data analysis be used to improve the United States’ criminal justice system?            Right now, in the United States the most talked-about policy subject is crime and police reform. By far the biggest reason for this is that following the unnecessary deaths of several unarmed black Americans at the hands of law enforcement officers, the public has been demanding serious reform to the police system in the United States. But at the same time, law enforcement in this country was already potentially facing major changes for a different reason: the rise of predictive policing technology. This generally involves using predictive models to determine who is most likely to commit future crimes and where the crimes are probably going to be committed. Although systemic racial biases tend to manifest themselves to some degree in computer algorithms that were programmed by humans, it is possible that by combining data analysis strategies with certain political reforms suggested by activists
Read more

Housing Voucher and Tax Credit Programs

Image
How should the United States government address the issue of housing inequality? Researchers have found housing inequality is a major contributor to overall income inequality in the United States, as the two statistics have followed very similar patterns over recent decades (Albouy, Zabek, 2016). Each measure steadily declined after the Great Depression before reaching their lowest point in the 1960s, then both started increasing and have never really slowed down to this day. For this reason, it is important to analyze how housing inequality has grown over time and how it can be reduced in the future. Housing is a key basic need for the overall population, specifically in the United States, and is also a significant financial asset as it accounts for over 60% of the wealth held by the middle class and 40% of the United States’ capital stock (Albouy, Zabek, 2016). As the chart below depicts, in recent years rent prices have greatly increased while renters’ incomes have not kept pa
Read more

Using Big Data To Prevent Pandemics

Image
Amid the COVID-19 crisis, with 2 million cases of infection in the United States and 110,000 Americans killed by the disease, it is important to consider the role of big data in the virus’ spread and how data analysis can be used to prevent further infectious disease outbreaks. According to an Economist Intelligence Unit survey, 73% of data scientists and professionals in public, private, and non-government organization sectors believe that data analytics will help to prevent pandemics, so although it clearly did not prevent this one, there is still reason to believe it can be a useful tool in the future. Researchers have known for years that analyzing and acting on Internet data, mobile phone logs, and aggregated reports of symptoms can help to slow the spread of infectious diseases. When relatively few people are infected by a virus, it can be tremendously helpful to first detect where people are infected and where these people are moving, then enact policies specifically targeted at
Read more