Secretary DeVos Warns of Student Debt Crisis

Secretary Betsy DeVos delivers opening remarks at the Federal Student Aid (FSA) Training Conference in Atlanta. She stands at a lectern to the side of an American flag and a U.S. Department of Education flag at the left of the photo. In the background is a large banner with "Federal Student Aid An Office of the U.S. Department of Education" written on it.
Secretary DeVos delivered the opening remarks at this year’s Federal Student Aid Training Conference, raising “a warning flag with American students and American taxpayers.” While noting that “our higher ed system is the envy of the world,” she also cautioned, “if we, as a country, do not make important policy changes in the way we distribute, administer, and manage federal student loans, the program on which so many students rely will be in serious jeopardy.”

In addition to her warnings about the looming student debt crisis, the Secretary also recognized administrators for their valuable work and shared some of the ways the administration is rethinking financial aid.

If you missed the Secretary’s speech, here are the three greatest takeaways for financial aid administrators.

The myStudentAid mobile app

We did what was alleged to be impossible: we made a government form look almost appealing! Seriously, we did more than make it look good. There were plenty of folks who declared it could not be done. They said the Department was “overpromising what it could deliver.” That what was required was “overwhelming” … the time frame was “impractically” ambitious.

As you know, the myStudentAid app launched exactly on schedule. And it’s already making an impact.

It has been downloaded nearly 250 thousand times and more than 375 thousand FAFSAs have been submitted on a mobile device! I’ve met with a number of students across the country, some of whom have given great feedback for tweaks and improvements, and others who’ve shared how happy they are to have this tool at their fingertips. I hope you’ve heard similar stories.

Today the app makes it easier for students to complete their FAFSA. In the near future, a student will be able to see how much he or she owes at any moment in time, what repayment options are available, and how those options will impact the total amount owed over time.

Overall, these NextGen initiatives are the most significant changes to Federal Student Aid… ever. And we’re only getting started.

Financial Literacy

Imagine how students would benefit if they could easily and continually plan and budget for their education, if they could seamlessly access personalized insights about the outcomes of the program they are considering or in which they are enrolled. Think about the power of having hard numbers, and how having that information could help a student make more informed – and better – decisions.

We are working to bring new tools like these online soon, so that in partnership with you, we can all fulfill our charge to help students earn their degree and be positioned to succeed when they enter repayment. Because this higher education crisis is borne out in more than just numbers.

Student Loans

I’m here to raise a warning flag with American students and American taxpayers: We have a crisis in higher education. Our higher ed system is the envy of the world, but if we, as a country, do not make important policy changes in the way we distribute, administer, and manage federal student loans, the program on which so many students rely will be in serious jeopardy.

This crisis demands the attention of Congress, the American taxpayer, colleges and universities, parents, and students. In a word, everyone.

Federal Student Aid was established to come alongside students who lack financial resources to pursue higher education. Since its first iteration in 1965, however, it has outgrown its structure and its governance. That reality has increasingly significant implications for American families and the American economy.

The Secretary continued:

Today, FSA’s portfolio is nearly 10 percent of our nation’s debt. Stop and absorb that for a moment… ten percent of our total national debt.

The student loan program is not only burying students in debt, it is also burying taxpayers and it’s stealing from future generations.

The parade of programs, repayment options, and complex rules serves no one well. Everything has become more cumbersome and confusing for everyone.  The government monopoly has proven costly to taxpayers and it hasn’t been a panacea for students either. We know students are having poor experiences. With more than 30 variations of 10 different repayment plans, each with their own set of burdensome requirements, it’s no wonder this government maze doesn’t work.

The annual FSA Training Conference continues all this week in Atlanta. Around 6,000 financial aid professionals are expected to attend this conference, which provides attendees with the opportunity to network, participate in hands-on sessions, hear from financial aid industry leaders and learn more about federal regulations and legislation. The U.S. Department of Education and Federal Student Aid are looking forward to another invigorating FSA Training Conference as administrators from across the country continue to serve, educate and support students on their lifelong learning journeys.

 

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