« Growth in FAFSA Filings Slows To 1.3% In 3Q | Main | College Board Report on Student Aid: Federal Aid and Federal Loans Up , Private Loans Down »

October 25, 2010


Feed You can follow this conversation by subscribing to the comment feed for this post.

Walter Sobchak

How much of total tuition receipts is this amount?


It is not just anecdotal evidence about the plus loan. The Plus loan administered by Direct Loans is approving at a substantially higher rate than the old FFELP program: Here are some Stats on that and another thanks to Mark Kantrowitz: http://j.mp/ceOwOq


Unless we are going to switch to a scandanavian model where parents are completely out of the picture, the USA's financial aid model is still based on the parents as primary responsible party for funding their children's postsecondary education. Because of lender subsidy caps in the federal program, lenders for decades found student loans more profitable than parent loans.) (The default rates on parent loans have always been much lower, though, than for Staffords.) Discussion about the "SAP gap" at lender events made it clear that lenders were strongly downplaying the benefits of parent PLUS loans in interactions both with college financial aid administrators and with families. By the time the "SAP gap" was finally fixed, the anti-PLUS bias in the financial aid process was already cast, and the era of new FFEL originations was nearing its end anyway. Financial aid administrators also found anecdotally that parents from "the me generation" were much less eager to borrower for their kids' postsecondary education than the HEA presumes.

Now that lenders are not making new federal loans, there should be an aggressive push by financial aid administrators as well as federal officials to get most parents into borrowing from the federal loan program. In addition, there should be a review of the suspicious shift of America's student population from dependent to independent status -- which generally allows the colleges to access a lot more federal student aid. The Kantrowitz figures, as detailed in his original paper, do not actually indicate approval rates and non-approval rates but are imputed from somewhat-unrelated statistics and likely simply reflect differences in the composition and operation of the DL and FFEL programs that existed during 2007-08.

The fake stories labeling federal PLUS loans as "sub-prime" instruments are part of the "fear, uncertainty and doubt" strategy developed by those who want to replace the USA's whole postsecondary education system with a free education for all model, because they don't feel they received a good education but still have to repay their student loans. A strong consumer program should be set up to address individual troubles, and then these individuals should move out of the policy sandbox because their issues do not represent "a generation adrift" or "a national trend." They are simply individual consumer issues which need to be addressed as such.

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Your comment could not be posted. Error type:
Your comment has been saved. Comments are moderated and will not appear until approved by the author. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.


Post a comment

Comments are moderated, and will not appear until the author has approved them.

Your Information

(Name and email address are required. Email address will not be displayed with the comment.)


SLA Private Student Loan Ratings

  • SLA :: Ratings
    Trusted source for independent, objective and timely information about private student loans

Paying For College Blog

  • Paying for College Blog
    Site for parents and students looking for independent and objective information about financing a college education

Want to receive daily SLA Blog updates via e-mail?

Enter your email address:

Delivered by FeedBurner

SLA Search Engine

Terms and Conditions