Senator Warns of a Student Loan Bubble

March 27, 2014
NPR Online 
student loan news
The federal government provides more than $150 billion in grants and loans to college students each year. While experts say a bachelor's degree is increasingly valuable, students are borrowing record amounts for these degrees. On March 27, the Senate held a hearing on reauthorization of the Higher Education Act, a 1965 law that governs federal financial aid. Sen. Tom Harkin (D-Iowa), chairman of the Health, Education, Labor, and Pensions Committee, oversaw the hearing.

In an interview with NPR's Morning Edition, Harkin pointed out the disparities between students from high-income and low-income families. A high-income, low-performance student has an 80 percent chance of going to college; while low-income, high-performing students with a B or better average have about a 20 percent chance. Students who graduate from college with large debt loads cannot afford to buy a new house or make significant investments.

Harkin also said that many for-profit schools were pursuing the poorest students to get the maximum Pell Grants and loans. Many students did not getting a good education and often dropped out and defaulted on their loans. Even so, the for-profit colleges got to keep the money. Harkin said there is a bubble in student loans, similar to that in the housing market.

Abstract News © Copyright 2008-2013 INFORMATION, INC.
Powered by Information, Inc.

Stay Updated

Join the fight against predatory lending. Enter your e-mail to sign up for breaking news, action alerts, and CRL's original research.

   Please leave this field empty

Help Us End Predatory Lending

Predatory lending destroys family wealth, and preys on our most vulnerable communities. You can help us end abusive lending practices by donating to CRL, or by sharing our work with others.