For the last several months, we’ve seen the results of more than a dozen studies to remake the federal student aid system, part of the Reimagining Aid Design and Delivery project funded by the Bill & Melinda Gates Foundation. The idea behind the effort is to seed ideas for the future of financial aid in advance of the reauthorization of the Higher Education Act.
The reports include many solid ideas for reforming student aid. But in reading the reports, one comes to another conclusion: Despite the billions we spend on student aid, we don’t know as much as we should about how it’s used or how effective it is.
Let’s take federal loans as just one example, since they tend to get the most press these days with stories about students unemployed with crushing debt or their parents delaying retirement to pay off the debt they took on to send their kids to college. Here’s just some of what consumers need to know about federal loans:
Average debt at graduation
Given all the numbers floating around about student debt, you would think that we can easily find how much debt the typical student at a particular college has at graduation. But go ahead and try to compare colleges on this measure. The New York Times has a cool interactive that allows you to search the average debt by school, but it’s missing thousands of institutions because it’s based on self-reported data and many colleges refuse to participate in the Common Data Set.
The new College Scorecard lists a median borrowing amount, but if you look closely at the data source the number includes parental PLUS loans, which are actually the responsibility of the parent, not the graduate.
And finally the Education Department’s College Navigator lists average loan amount by year, but not a cumulative number for a cohort of students.
More on how parents are borrowing
The size of the federal parent PLUS loans has increased drastically in the last decade. Unlike student loans, PLUS loans don’t have a borrowing limit and are remarkably easy to get. So parents often turn to them to fill the gap in financing an education (and are often encouraged by some colleges, which include them in financial aid packages). Yet all we really know about the loans is the number of borrowers per institution and a college’s overall PLUS loan volume. We don’t know, for instance, how many parents are borrowing for multiple children or how many default on the loans.
Photo Credit: Fabulous and Frugal
