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Statement of Jessica Thompson, policy and research director, TICAS:

"Today, Representatives Susan Davis (D-CA) and Bobby C. Scott (D-VA), and Senators Mazie Hirono (D-HI) and Patty Murray (D-WA), introduced the Pell Grant Preservation and Expansion Act. The bill would increase college affordability and access by securing, improving and expanding the Pell Grant, which is the federal government’s most effective investment in higher education. Congress just cut $1.3B from Pell Grants for FY2017, and the President and House Republicans are proposing to cut billions more in FY2018. In stark contrast, these legislators are providing the leadership we need for students and families struggling to pay for college. 

"Each year, more than 7.5 million students rely on Pell Grants to afford college. Yet, the current maximum grant covers the lowest share of public college costs in over 40 years, and will lose its annual inflation adjustment after this year. Boosting the purchasing power of the grant and permanently indexing it to inflation to prevent additional erosion of its value are investments we know are critical to increasing college access and success. The bill includes these and other important improvements that TICAS has called for, including extending the lifetime eligibility limit for Pell Grants, resetting eligibility for students defrauded by their schools, and making Pell Grants a mandatory program to guarantee sufficient annual funding and eliminate any uncertainty for students.

"We thank Representatives Davis and Scott, and Senators Hirono and Murray for their longstanding and continued leadership on college affordability, and Pell Grants specifically. Pell Grant recipients are already more than twice as likely to borrow to attend and complete college, and leave school with significantly more debt than their higher income peers. As college costs and student debt continue to rise, we urge Congress and the Administration to work together on making the Pell Grant program, the cornerstone of federal financial aid, work even better for America’s students and the American economy rather than debating how to cut it." 

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This week, the Department of Education shared new information about its plans to restore access to the IRS Data Retrieval Tool (DRT), a tool that helps millions of students and borrowers easily transfer their tax information into the online FAFSA and the online application for income-driven repayment (IDR) plans for federal student loans. The tool has been unavailable for more than two months after being taken offline due to security concerns. Facing pressure from governors, legislators, colleges, financial aid professionals, and student advocates, the Department has committed to getting the tool secured and back online by the end of this month for the over four million borrowers who use it for IDR. However, the Department and IRS will not have the DRT back up for FAFSA use until the next application year starting in October, an extended outage that will continue to affect millions of students.

The DRT will be restored for student loan borrowers by the end of May. We thank the Department for committing to this timeline, since new data show that about 4.5 million borrowers use the DRT to apply for IDR plans or annually update their income information in those plans. As detailed in our earlier blog post and a recent MarketWatch piece, the DRT outage is more than just an inconvenience for borrowers. While the DRT is down, borrowers with taxable income cannot complete the process of applying for IDR or updating their income online at StudentLoans.gov. Borrowers who miss annual deadlines to update their income information can face unaffordable spikes in monthly payment amounts that increase their risk of delinquency and default, as well as interest capitalization that can add substantial costs.

Students still applying for financial aid for the upcoming 2017-18 year will not have access to the DRT at all. This extended outage will impact millions of students, as more than half of all aid applicants (more than 11 million students) applied for aid on or after April 1 in recent years. Many of these applicants used the DRT, and a greater share were expected to use it in 2017-18 due to recent improvements to the FAFSA timeline.  

For students applying for federal financial aid for the 2018-19 year, the Department and IRS are on track to restore access to the DRT by the time the FAFSA opens on October 1, and to do so in a way that protects access for low-income students. This is encouraging news, particularly since new data show that roughly half of all FAFSA filers use the DRT to transfer tax information from the IRS. As discussed in our earlier blog post, the DRT outage is causing millions of students to face a more complicated, daunting, and time-consuming process to apply for aid. Delays in that process can prevent students from getting their financial aid in time to enroll in college.

Given the importance of the DRT in helping students access financial aid and manage their loan payments, we echo the National College Access Network’s statement that the DRT outage “is an emergency, not a mere inconvenience.” It is essential to quickly restore the DRT in a way that balances student access and data security.

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20 million students complete the FAFSA every year to apply for financial aid from the federal government, states, and colleges. More than six million federal student loan borrowers are currently enrolled in income-driven repayment (IDR) plans to help keep their payments affordable and avoid default. For years, these students and borrowers have been able to use the IRS Data Retrieval Tool (DRT) to easily transfer their tax information into the online FAFSA and the online application for IDR plans. The DRT was abruptly taken down a month ago due to security concerns, and the Department of Education recently announced that it is expected to be offline until the next FAFSA season begins in October 2017.

The DRT is not just a “convenience” (as the IRS has described it), but the centerpiece of major improvements in simplifying essential financial aid processes. It has greatly increased efficiency and accuracy for consumers, colleges, and loan servicers. And its outage will have profound impacts on millions of students and borrowers who still need to apply for aid, complete verification, and submit IDR forms this year. We urge the Department of Education and IRS to work together to restore secure access to the DRT as soon as possible, and to do so in a way that avoids creating barriers to access for low-income students, such as requiring complicated financial or personal information.

We blogged last week about a number of things the Department of Education should be doing to mitigate the effects of the DRT outage. Meanwhile, as long as the DRT is down, students and borrowers are facing a more complicated, daunting, and time-consuming process to apply for aid and keep their student loan payments affordable. Each additional hurdle makes it less likely that people will get all the way through the process and be able to meet crucial deadlines.

How many students and borrowers will be affected by the DRT outage between now and October?

  • More than 8 million students (40% of all aid applicants) applied for aid between April 1 and September 30 in recent years. Many of these applicants used the DRT, and a greater share were expected to use it in 2017-18 due to recent improvements to the FAFSA timeline.  
  • 3.4 million federal student loan borrowers applied for IDR or updated their income information electronically and had access to the DRT in the most recent year.*

How will students and borrowers be affected by the DRT outage?

For the FAFSA:

  • Instead of using the DRT to quickly transfer their tax information and pre-populate the answers to up to 20 high-stakes questions, students will have to get a copy of their 2015 tax return and manually input their data into the FAFSA (both the 2016-17 and 2017-18 FAFSAs require 2015 tax data). If they don’t have a tax return on hand, they can try to retrieve information from their tax software or tax preparer if they used one, or request a tax transcript from the IRS, but getting an official tax transcript can take up to 10 days by mail. It is possible but more difficult to quickly get an electronic transcript: you first need to have a mobile phone under your own name plus a personal credit card, mortgage, home equity loan, or car loan – hurdles that make that process inaccessible for many, particularly low-income families.
  • After submitting the FAFSA, students who don’t use the DRT may be more likely to be selected for an additional process called “verification” and required to get an official tax transcript to confirm their FAFSA information before they can receive their aid. For example, Purdue University reported that the share of aid applications flagged for verification doubled from 10% to 20% after the DRT was taken offline. The Department of Education has touted the DRT as “the fastest, easiest, and most secure method of meeting verification requirements.” Without it, students have to request official tax transcripts, with the hurdles discussed above. We, along with a bipartisan group of 43 lawmakers and national associations of financial aid professionals, college admissions counselors, and college access professionals have asked the Department to also accept signed tax returns while the DRT is not available.
  • The additional delays in getting the necessary documentation to apply for aid or complete verification will affect whether students receive their financial aid in time to enroll in college. Many states and colleges require the FAFSA for their own aid programs, many of which are first-come, first-served. For example, a Buzzfeed article reports that Texas state grants for needy students have already run out for this year, so students backlogged in verification are losing out on $5,000 of grant money. Additionally, more than half of financial aid administrators surveyed said that verification sometimes, often, or almost always results in students being unable to enroll on time. Without the DRT, the delays caused by verification will be even worse.

For IDR plans:

  • Borrowers with taxable income cannot complete the process of applying for IDR or updating their income online at StudentLoans.gov, which took an average of just 10 minutes when the DRT was available. The online application will create a PDF that borrowers will need to send into their loan servicer, along with a copy of their most recent tax return. Depending on their servicer, borrowers may be able to upload the required documents onto the servicer’s website or will need to mail or fax everything.
     
  • The additional hurdles for documenting income without the DRT affect not only borrowers who are applying for IDR, but also borrowers who are already in IDR. They are required to update their income documentation every year, and borrowers who miss those annual deadlines can face unaffordable spikes in monthly payment amounts that increase their risk of delinquency and default, as well as interest capitalization that can add substantial costs. As mentioned in our earlier blog post, we urge loan servicers to give borrowers in IDR more time to submit their updated income documentation while the DRT is down. 

* There are no publicly available data on how many electronic IDR applications were previously submitted between April and October (each borrower is on his or her own timeline), or how many borrowers specifically used the DRT.

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This post was updated on 4/24/17 to reflect changes from the Department of Education.

The IRS Data Retrieval Tool (DRT) allows students to automatically transfer their tax information into the online FAFSA or application for income-driven repayment (IDR) plans, instead of having to manually enter detailed tax return information. Millions of students each year rely on this streamlined online process to apply for federal student financial aid and to keep student loan payments affordable. Unfortunately, the DRT was abruptly taken down several weeks ago due to security concerns.

This week, a bipartisan group of 43 lawmakers from the House and Senate wrote a joint letter expressing concern about the DRT outage and recommending that the Department of Education and IRS take specific actions to improve communications and reduce the impact on students affected by the outage. Earlier this month, we joined a similar letter with national associations of financial aid professionals, college admissions counselors, and college access professionals.

Just today, the Department of Education announced that the DRT will be offline until the start of the next FAFSA season, which is expected to be October 1, 2017. This extended outage has very troubling implications for students applying for aid and borrowers trying to manage their student debt. The Department must take immediate steps to better communicate with and help students apply for the financial aid they need to get to and through college, as well as help borrowers access affordable loan payments that can keep them out of default. The Department should quickly move to:

  • Improve online communications about the DRT outage on all relevant federal websites and social media accounts, and engage in direct outreach to borrowers. Those communications should make clear that the DRT is currently down and provide specific guidance on what students, families, and borrowers should do in the meantime.
    • For example, prominent notices and guidance should be posted on:
      • The FAFSA homepage: As shown below, the FAFSA homepage includes an outage notice in the announcements, but it is not immediately clear what the outage means for students and users must scroll down for any guidance.

  • StudentAid.gov: On StudentAid.gov, the outage notice is one of several rotating items in the announcements bar at the bottom of the page, which can be easily missed.

  • StudentLoans.gov: There is currently no notice or announcement about the DRT outage on StudentLoans.gov, where borrowers go to apply for IDR plans and annually update their information to keep their payments tied to income.
     
  • The IDR application itself. There is currently no mention of the DRT outage on the online IDR application on StudentLoans.gov. As shown below, there are instructions within the application for how to proceed without the DRT, but borrowers may still start the form thinking that they can use the DRT, as they may have in previous years. Without the DRT, those borrowers cannot complete the application process online, but will have to print out the pre-filled application and mail it to their loan servicer, along with their paper tax return. (Update: The Department of Education has added a notice about the DRT outage to the IDR application.)
  • The Department’s Facebook and Twitter pages: Although it’s helpful that DRT outage notices are “pinned” at the top of both pages, the Department should regularly post those announcements so the public will see them in their feeds.
  • Additionally, the Department should directly email all borrowers in IDR plans who are approaching their annual deadlines to update their income information, informing them about the outage, telling them what they’ll need to do, and encouraging them to submit their paperwork early, since it may take loan servicers extra time to process their documentation without the DRT.
  • If students’ likelihood of being selected for verification is based on their use of the DRT, the Department should revise its verification selection criteria to prevent increases in the number of students who have to go through that complex extra process.
     
  • For FAFSA applicants selected for verification, the Department should allow signed copies of tax returns to satisfy documentation requirements. Students and parents used to be able to use the DRT for this, and the process of requesting an official tax transcript can be very burdensome (as documented by the National College Access Network). (Update: The Department of Education announced on 04/24/17 that it is making this change.)
     
  • The Department should adjust its criteria for requiring colleges to resolve conflicting information between the 2016-17 and 2017-18 FAFSAs, which are both based on income during calendar year 2015. This will help ensure that students get the aid they need and avoid disruptions in the middle of the year.
     
  • The Department should urge loan servicers to give borrowers in IDR more time to turn in their updated income documentation. Borrowers who miss their annual deadlines can face unaffordable spikes in monthly payment amounts that increase their risk of delinquency and default, as well as result in interest capitalization that can add substantial costs. Under current regulations, loan servicers have some flexibility in setting their deadlines; instead of setting deadlines 35 days before the end of the borrower’s annual payment period, they can set them closer to the end of the payment period. As long as borrowers submit documentation before their servicer’s deadline, they are not penalized, even if their paperwork is not fully processed before their next payment period starts. 
     
  • The Department should ensure that its loan servicers and Federal Student Aid Call Center employees are well-equipped to help students, families, and borrowers navigate financial aid processes in the absence of the DRT

It is also crucial that while the Department and IRS work together to restore access to the DRT as soon as possible, they prioritize finding a way to maintain the security of the tool without creating barriers to access. We urge them to avoid requiring complicated financial or personal information that the low-income students who rely on the tool are unlikely to be able to provide.  

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This post was revised on March 28 to include supplemental mandatory funding that would also be eliminated under the House proposal to cut all mandatory funding

While the Trump administration’s budget raids $3.9 billion in discretionary Pell Grant funding in fiscal year 2018 and remains silent on Pell Grant mandatory funding, House Republicans on the Education and Workforce Committee have made clear their plan to eliminate all $77 billion in mandatory Pell Grant funding over ten years.

This House plan to eliminate mandatory Pell funding would have profoundly harmful effects for students and put college further out of reach for millions of Americans. Mandatory funding currently pays for $1,060 of the current maximum Pell Grant (almost one fifth of the $5,920 grant in school year 2017-18), which already covers the lowest share of the cost of attending college in over 40 years.  

The $7.2 billion in mandatory Pell Grant funding in FY 2018 alone is the equivalent of the average Pell Grant awards for 2.0 million students—one in four students receiving Pell Grants. This is more than all the Pell Grant recipients attending college in Texas, Florida, Illinois, Wisconsin, and Ohio combined (1.9 million students).

Prior harmful cuts to Pell Grants, combined with an improving economy, have reduced program costs and created temporary reserve Pell Grant funding. Student advocates and more than 100 members of Congress have called for using this reserve to restore some of the lost purchasing power of Pell Grants and to reinstate access to grants year round. Rather than invest these reserve funds in Pell Grants for students, the president’s budget simply cuts $3.9 billion in FY 2018. The House plan that would restore grants year round while cutting $77 billion over 10 years means Congress will almost certainly drain the reserve funds, briefly hiding the full magnitude and consequences of eliminating mandatory Pell Grant funding.

The House proposal to eliminate all mandatory funding would cut Pell Grant funding by $7.2 billion in FY 2018 alone. Even if Congress used all the Pell Grant reserve funds to replace the Pell mandatory funding in FY 2018, it would lead to a $2.7 billion Pell Grant funding gap the next year (FY 2019). To close this gap, Congress would have to eliminate grants entirely for more than 700,000 students or cut all students’ grants by an average of almost $350, or both eliminate and cut grants. The funding gap would increase each year, requiring even more severe Pell Grant cuts going forward.

It is unconscionable to create a Pell Grant funding crisis by eliminating all mandatory funding and try to mask it using the program’s temporary reserve. Rather than making deep cuts to Pell Grants, Congress should instead invest existing Pell Grant funding in helping students whose urgent needs include restored access to grants year round, an increase in the maximum award, and an extension of the grant’s inflation adjustments that expire after this year (FY 2017). 

Graphics provided by Young Invincibles.

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It’s clear we need more student aid in California, and $1.5 billion could go a long way to reduce our state’s gaping inequities in college affordability and completion if spent right. However, the California Assembly’s $1.5 billion “Degrees Not Debt Scholarship” proposal unveiled today is unlikely to achieve those goals. While we applaud the desire to dedicate substantial new resources towards financial aid, and the proposal’s recognition that the cost of college extends well beyond the cost of tuition, the Assembly plan would provide generous awards to students with little or no need, and far less help to those with the biggest affordability barriers and most burdensome debt.

Here are our top questions and concerns:

  • How will the scholarships reduce debt burdens, as the program name suggests? We estimate that a low-income UC student would receive about $2,000 more in aid than they currently do, while a student with a six-figure income could get more than $15,000 more per year.  Yet half of all UC graduates who leave school with debt have family incomes under $52,000. Further, UC students who graduate with loans have average debt around $21,000. From the perspective of debt reduction, giving higher income students $15,000 per year is excessive, especially when most don’t borrow, and giving lower income students an additional $2,000 per year is not nearly enough.
     
  • What will the impact be on students of color? Cal Grant recipients at public colleges are more likely to be Latino, Black, Native American, or Pacific Islander, and more than half of UC and CSU students in these groups have family incomes of $50,000 or less.[1] Yet while low-income students’ disproportionate debt burden shows that their Cal Grants are not sufficient to address their needs, Cal Grant recipients would get smaller “Degrees Not Debt” scholarships than those with six-figure incomes. Many of the higher income students, who are disproportionately white, don’t even need the aid as defined under federal and state law.
     
  • Why does the plan leave out students at the schools where affordability challenges are often most severe? In many regions across the state, low-income community college students face higher college costs than UC or CSU students, yet community college students aren’t eligible for the scholarships. The Assembly’s separate proposal to increase Cal Grants for full-time community college students will help the small proportion of students who get a Cal Grant. But hundreds of thousands of students at the community colleges – as well as other colleges – can’t get Cal Grants because the program isn’t sufficiently funded, and half of them are living in poverty. Those students would get no additional support under the Assembly plan. Why should UC students with six-figure incomes get scholarships of $15,000 when high-achieving community college students living in poverty can’t get a Cal Grant worth a small fraction of that? For perspective, for a billion dollars, the state could give every eligible Cal Grant applicant an award.
     
  • Why does the Assembly plan diverge so sharply from the plan developed by the LAO, at the Assembly’s request? Last year, the Legislature, championed by the Assembly, tasked the Legislative Analyst’s Office with developing a proposal to create debt-free college options for California. Fully two-thirds of the LAO’s $3.3 billion proposal was slated to support community college students, so that students at all public colleges had a viable, full-time, debt-free path to graduation. The high share of estimated LAO program costs needed to help community college students underscores how important community college students are to the state, and how far the state is from supporting them sufficiently. Yet the Assembly “Degrees Not Debt Scholarship” proposal leaves them out. Why don’t students at community colleges, where most of the state’s low-income students and students of color enroll, deserve the option to enroll full time, too, when full-time enrollment greatly increases students’ odds of completion? Wouldn’t giving community college students a true full-time option help more of them transfer to UC and CSU?

California has major problems with college affordability and completion, but neither will be solved by the “Degrees Not Debt Scholarship” proposal. We hope that legislators will commit to retooling the proposal so that it addresses the realities facing California’s low- and truly middle-income college students.


[1] Author’s analysis of  the National Postsecondary Student Aid Study, 2007-08, the most recent publicly available data on California segments’ enrollment by race/ethnicity and income.

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Yesterday, the U.S. Department of Education announced it was giving schools about three additional months to comply with two requirements under the gainful employment regulation finalized in 2014. This delay is troubling given the urgent need to protect students and taxpayers from career education programs that consistently leave students with debts they cannot repay.  

In January, the Department released the first set of official career education program rates under the gainful employment rule. Fully three-quarters of the rated programs passed the modest standards outlined in the rule, which measure graduates’ debt compared to their incomes to ensure that federally-funded career education programs at public, non-profit, and for-profit colleges are complying with the statutory requirement that they “prepare students for gainful employment in a recognized occupation.” In fact, nine out of 10 colleges with rated career education programs had no failing programs, including the for-profit college chains American Public University, Capella University, Concorde Career College, ECPI University, Empire Beauty School, Grand Canyon University, and Strayer University.

But 803 programs (9%) failed the test because they consistently leave students with more debt than they can repay. Some of these programs were at schools that have since closed, including ITT Tech and Westwood College. But many other failing programs are still enrolling students and receiving hundreds of millions of taxpayer dollars. What do these programs look like? Here are some examples.

  • Florida Technical College in Orlando charges $31,555 for its associate’s degree in medical assisting, and its graduates typically earn only $14,500 a year – less than the federal minimum wage working full-time – and owe over $17,000 in federal student loan debt.
  • McCann School of Business and Technology in Hazelton, PA charges $30,860 for its associate’s degree in medical assisting, and it has only a 7% on-time completion rate and a 46% job placement rate. Its graduates typically earn only $20,300 – less than the average earnings of high school graduates – but graduates of this program at all McCann School locations in 2014-15 had over $26,000 in student loan debt.
  • Art Institute of Pittsburgh charges $44,804 for its associate’s degree in graphic design, yet only 12% of completers finish on-time, and those who graduate typically earn less  than $22,000 per year and have over $40,000 in federal student loan debt. 

These and other failing programs are leaving students worse off than before they enrolled, and taxpayer dollars should not be subsidizing them.

The good news is programs like these are now required to warn current and prospective students that they failed and will lose eligibility for federal grants and loans next year if they do not improve. This warning requirement was not affected by the Department’s announcement yesterday. And other failing programs have stopped enrolling new students, including all of the failing programs at the University of Phoenix, and Harvard University’s graduate certificate program in theater arts, where students typically graduated with $78,000 in debt but earned only $36,000.

Even better news? There are thousands of career education programs offered at locations across the country and online that are not leaving graduates with huge debts they cannot repay, including programs at for-profit, public, and non-profit colleges whose graduates earn over $60,000 a year. Many programs where graduates have manageable or no debt are offered near programs that are failing or in the zone requiring improvement. For instance, two for-profit colleges in Harrisburg, Pennsylvania, offer medical/clinical assisting certificate programs, but the graduates of Keystone Technical Institute typically earn $10,000 more and have significantly less debt than graduates of the Brightwood Career Institute. In Miami, Florida, graduates of the public Miami Dade College’s medical/clinical assisting certificate program typically have no debt and earn twice as much as the graduates of the same program at the nearby for-profit Florida Education Institute, where graduates also have thousands of dollars of debt.

Thanks to the gainful employment rule, career education programs are required to disclose key information like their cost, typical graduate earnings and debt levels, and job placement rates so students can make more informed decisions about where to enroll. Programs that fail the rule’s minimum standards also have to warn current and prospective students. And to protect taxpayers from subsidizing programs that consistently underperform and leave students worse off, failing and zone programs have to improve in order to continue to receive federal funding.

In anticipation of the rule, many schools have already improved their programs, ended failing programs, lowered their prices, and/or started providing more career placement assistance. These are positive reforms, but the hundreds of failing and zone programs demonstrate that far more improvement is needed to ensure that the more than $24 billion in federal grants and loans spent each year on career education programs are improving, not ruining, people’s lives. 

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Debbie Cochrane, TICAS vice president, provided expert testimony on college affordability before a joint hearing of the California Assembly’s Higher Education Committee and Budget Subcommittee on Education Finance on Monday, February 27. Her testimony described which students face the greatest affordability barriers, and included new TICAS research showing the severity of the affordability problem for California’s low-income students, and why free tuition is not the solution. (Debbie Cochrane's testimony starts at the 20:35 mark.)

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A new report released last month provides some staggering figures on an incredibly important topic – state disinvestment from higher education in California – and rightly makes the case that shortchanging public colleges shortchanges our future. Unfortunately, the report makes the erroneous claim that eliminating tuition at public colleges will eliminate student debt for the students who attend them. This is simply not the case. In California, state and institutional financial aid programs are among the most generous in the nation in helping students pay for tuition charges at all three public systems. In fact, most Californians who leave public colleges with debt already attended college tuition-free. The real affordability challenges for California’s public college students are paying for non-tuition college costs including room and board, books and supplies, and transportation.

Consider the University of California (UC), where tuition charges are highest among the state’s public institutions: UC’s Blue and Gold plan promises that no student with family income under $80,000 will need to pay tuition, and in fact UC also gives aid to many students above that threshold to at least partially cover tuition. If tuition charges equated to student debt, then only students with family incomes above $80,000 would leave school with debt. Yet data from UC show that is not the case: we estimate that half of the UC graduates who leave school with debt have family incomes under $54,000 – students whose tuition UC guarantees it will cover.[1]  Graduates’ likelihood of leaving school with debt decreases with income – students from the lowest income bracket are three times as likely as students from the highest income bracket to graduate with debt – because higher income students are more likely to be able to afford what they are asked to pay. Available data on debt loads by income for other public college graduates, in both California and across the nation, show this same trend. 

In fact, the majority of students’ costs for attending public colleges and universities are not tuition charges, but rather the living expenses students incur to buy their books, get to campus, and stay housed and fed. Yet, while tuition-focused aid programs in California have kept up with increases in tuition, the same cannot be said about the primary state grant that helps students with non-tuition college costs. If it had kept pace with costs, the Cal Grant B access award, $900 in 1969-70, would be more than $6,300 today. Instead, it is just $1,670.

State disinvestment from public higher education is a significant problem, and one that demands both federal and state policymakers’ attention. But eliminating students’ need to borrow requires more than just free tuition, because most Californians who leave school with debt already had free tuition. Policymakers interested in improving college affordability and reducing student debt should start by looking at who has debt and why, and increase grant aid for students struggling to pay for non-tuition college costs.


[1] Includes dependent students only as UC does not release information on independent student debt loads. Ninety-three percent of UC undergraduates are dependent.

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Borrowers are now one step closer to having a more streamlined process to keep their federal student loan payments affordable. Currently, borrowers struggling with payments can enter repayment plans that base monthly payments on their income, but they are required to update their income information every year. More than half of borrowers miss the annual deadline and the consequences can be severe – unaffordable spikes in monthly payment amounts that increase their risk of delinquency and default, as well as interest capitalization that can add substantial costs.

For example, a single borrower with $25,000 in debt (6.8% interest rate) and $25,000 in adjusted gross income (AGI) would owe $60 a month under the Pay As You Earn (PAYE) plan, but would owe $288 a month – over four times more -- if he or she missed the income recertification deadline.

TICAS, along with bipartisan groups of lawmakers in both the House and the Senate, other advocates for students and consumers, higher education leaders, financial aid administrators, and loan servicers have all advocated to reduce the likelihood that borrowers end up in delinquency or default by automating the annual recertification process (what is commonly known as “multi-year consent”). In response, the U.S. Departments of Treasury and Education recently announced an agreement to allow borrowers to provide permission for their annual income to be updated automatically using their existing tax data. Borrowers will be able to revoke that permission at any time. The move received bipartisan praise.

Automating the annual recertification process is a common-sense improvement that will help borrowers stay on top of their student loan payments. This change will also reduce the paperwork burden on student loan servicers. Now, it is incumbent on the agencies to work together to promptly implement the agreement to make multiyear consent a reality for borrowers and servicers, and for Congress to ensure that they have sufficient funding to do so.

Soon to be reintroduced in the new Congress by Representatives Bonamici (D-OR) and Costello (R-PA), the bipartisan SIMPLE Act also takes aim at the cumbersome annual recertification process for borrowers enrolled in income-driven repayment plans. In addition to requiring that borrowers can have their income automatically updated each year, the bill would dramatically reduce defaults by automatically enrolling severely delinquent borrowers who have not made a payment in four months into an income-driven plan. With a record eight million federal student loan borrowers in default, and one in four borrowers either delinquent or in default, these common-sense measures are urgently needed.

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