Debt Responsibilities

Apparently the financial aid offices at American colleges can help students make better decisions about their loans. According to a new report issued by the Project on Student Debt:

College financial aid offices have a unique opportunity — and responsibility — to help students and families make informed and careful decisions about both how, and how much, to borrow. This report attempts to shed light on ways that colleges can help students and their families avoid unnecessarily risky and costly debt.

Currently, most private student lenders require colleges to confirm basic information about the student’s enrollment and costs before the lender will issue a private loan. This “school certification” process gives colleges a powerful opportunity to help students make sound borrowing decisions. We focused primarily on college practices related to school certification, and in the process identified some additional notable practices. In short, we learned that a college’s actions and involvement at crucial decision points in the borrowing process can have an enormous impact on whether students and their families make sound and informed choices about private student loans.

Well okay, but it seems that helping students and their families make sound and informed choices about student loans would merely indicate minimally competency. Any financial aid office that didn’t keep students fully informed about their debt levels and what that meant is utterly failing to do its job.

It’s time for reform, but reform should be about more than providing student with more information; they should be supplying students with less actual debt.

The Student Debt report recommended that colleges “Formalize policies and practices aimed at reducing private student loan usage,” “not include private student loans in financial aid offers,” and “use available tools to speed up the federal loan process, so students who need quick access to loan funds are not left only with private loan options.”

None of these things would really help students much, though. As long as we’re interested in talking about the responsibilities of colleges isn’t it time to consider why students are considering taking out private loans at all?

Really the best way to help families make good decisions about debt would be to stop jacking up tuition. Since 1980, inflation-adjusted tuition at public universities has tripled. If colleges made commitments to keep schools reasonably priced they could make a real dent in the need for debts, whether “affordable” or not.

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer