May 16, 2022
The federal government’s student financial aid system has long come under fire, drawing a range of accusations: the U.S. Department of Education is lax in monitoring loan servicers, loan forgiveness is difficult for borrowers to secure, students are shepherded into plans that make little sense for their financial circumstances.
These criticisms took on new fervor as the Biden administration began to rework federal financial aid and approved more than $18.5 billion in loan discharges for more than 750,000 borrowers. The White House is also reportedly considering using executive action to grant broader loan forgiveness.
In light of these discussions, the National Association of Student Financial Aid Administrators, along with a cadre of 21 higher education organizations, developed recommendations to improve the federal loan system. More than two-dozen resulting suggestions range from how to streamline loan plans to how to better oversee servicers.
We’ve summarized some of NASFAA’s recommendations, which are being released in a report Monday. They encompass three major areas: loan servicing, loan repayments and defaults.
The policy recommendations might not affect all of colleges’ day-to-day operations, but they could influence the functioning of a vast student aid system that feeds into one of college leaders’ key concerns — public perception of higher ed.