Student-loan forgiveness could tap unrealized potential
A year or so ago, a retired community leader brought a prospective student to my office.
She was a bright, hard-working young woman in her late 20s holding down two jobs, neither of which could lift her out of poverty. She had a clear vision of the future she wanted to create for herself as a registered nurse and was ready to work very hard to get there.
Unfortunately, she had an almost insurmountable barrier to overcome. It wasn’t that she had dropped out of high school (with good grades) for “life reasons.” She had already overcome this by earning her GED. Her obstacle was defaulted student debt.
As she finished her GED, someone persuaded her to visit a local university — not one of the reputable ones, but one now known for exploiting both unsophisticated students and the federal guaranteed loan program, one that has since gone out of business.
She had been swept up into a registration process that “packaged” loans as a part of her tuition payment, believing she had received a scholarship. Within weeks, she realized the whole enterprise was a scam and stopped attending classes. It wasn’t until she came to Valencia that she was made aware that she wasn’t eligible to attend college due to the defaulted debt, which had grown over the years to a little more than $10,000.
Many Americans don’t realize that students with a defaulted loan aren’t just ineligible for any further student loans. Our institutions are forbidden by the financial aid system from offering them any federal grants or work-study awards — they’re “radioactive” as far as higher education is concerned. And there are thousands just like her right here in Central Florida — neighbors with aspirations and talent we need to encourage and develop. The new administration and Congress are discussing various models of loan forgiveness to recover these former students. Some involve loan forgiveness for public service. Others clear the debt entirely for students scammed by the most unscrupulous “colleges.”
The best of these are designed to help students just like the one described above. She doesn’t need $100,000 or more forgiven, just about $10,000. With this modest relief she can restart her education and someday become a nurse — talent we need now more than ever.
A number of objections have been raised for even modest proposals for loan forgiveness. These should be debated. But one objection is no longer sustainable. Some have argued that students with defaulted loans, even if they find a way back into college, are much too unlikely to complete their education; in short, they’re a bad bet. A recent national study sponsored by the Association of Community College Trustees, in which Valencia College participated, has shown unequivocally that when defaulted students have had their loan forgiven or paid for them by a third party, their educational outcomes improve dramatically, approaching those of students who never defaulted. At Valencia College, we’ve specialized for more than 50 years at helping people discover the depths of their own talent, no matter the circumstances from which they have come. I hope our partners in Washington will give us the tools to recover the talent stranded by modest levels of student debt so we can equip them to be contributors to our economy and our community.
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