UT report: Reduce debt with focus on graduation
Aim at those at risk of not getting degrees, it suggests.
Soaring student loan debt could be reduced by requiring students to prepare a kind of business plan for their college years, providing more oncampus work opportunities and adopting other measures aimed at those most at risk of not completing their degrees, according to a new report by a University of Texas System task force.
The report by a 14member panel of admin- istrators, students and financial aid specialists said such recommendations could be useful not only in Texas but nationwide.
Student loan debt stands at $870 billion, more than the nationwide outstanding balance on auto loans ($730 billion) and credit cards ($693 billion), the report said. Nearly 20 percent of students who borrow wind up defaulting on loan payments.
“Debt is a tool. It has a place like any investment,” Scott Kelley, the UT System’s executive vice chancellor for business affairs, said Wednesday. $870 billion — Total nationwide student loan debt 37 million — Number of borrowers 2 out of 3 — College seniors who graduated in 2011 with debt — Average debt
— Of borrowers defaulting on loans, those who did not earn a degree Source: College“Credit”: Reducing Unmanageable Student Debt and Maximizing Return on Education
But debt can also be a debilitating burden, especially for students who do not earn a degree and therefore miss out on the extra earnings generally conferred by that credential, said Kelley, who led the panel and is scheduled to present the report at a UT System Board of Regents meeting in Austin on Thursday.
The report notes that, of borrowers who default, more than 80 percent failed to complete a degree.
“Thus, while the student loan debt crisis is a complicated issue, the data suggest that the most impactful way to reduce unmanageable debt would be to increase the percentage of borrowers who complete their postsecondary degree,” the report says. “Hence, the challenge is to find new and effective ways to increase graduation rates and completion of degree programs.”
Among the report’s recommendations:
Have students prepare a “personal education plan,” detailing costs and academic goals to keep them on track.
Expand work-study programs and other oncampus student employment because studies show such students have higher graduation rates than students who work off-campus.
Step up academic and financial aid advising, especially for students who seem to be at risk of not completing their studies.
Encourage schools to come up with ways of cutting costs for students — for example, by offering no-frills campus housing
Kelley said system staff members would propose specific projects at a later date, including a pilot project to measure the benefits of preparing a personal education plan.