Student Debt Reduction Task Force reports to Regents
AUSTIN - The overall growth in student loan debt — which now surpasses national credit card debt — and the increase in student loan defaults have become national concerns. It is a serious issue that The University of Texas System’s Student Debt Reduction Task Force has taken on in its report: College “Credit”: Reducing Unmanageable Student Debt and Maximizing Return on Education. The task force is scheduled to present the report, which examines the scope and causes of the problem and offers specific recommendations, to the UT System Board of Regents on Thursday.
"College students across America have taken on $870 billion in higher education debt. This unprecedented level of college debt is not desirable or sustainable,” said UT System Board of Regents Chairman Gene Powell. “The recommendations of the task force will give the System and our institutions a road map to diligently work toward better student advising on debt and ultimately a reduction in debt for the students studying at UT institutions."
Formed as part of the UT System’s Framework for Advancing Excellence action plan, the task force examined the problem of excessive student loan debt and its impact on students and their families — one of the most crucial issues in higher education today.
Given the fact that student debt can ultimately determine a person’s future and its relevance to a student’s overall success, the UT System charged the 14 member task force with examining this critically important issue in order to better understand the factors which impact the burden of student debt, to creatively consider alternatives which might lessen that debt burden, and to recommend actions which would, over time, enhance a student’s likelihood of success and reduce the number of people who carry unmanageable student debt.
“Managing student debt is really about managing risk and risk is best managed through accurate and timely information,” said Scott Kelley, task force chair and UT System executive vice chancellor for business affairs. “Our report seeks to shine a light on the myriad of issues surrounding student debt and to recommend strategies whereby students and their families have access to better information, make more informed debt decisions and maximize the return on their educational investment.”
The report identifies three critical themes that help determine a student’s ability to manage debt:
- Degree completion;
- Better understanding of costs and returns;
- Transparency and decision support.
Student loan debt is especially burdensome for students who do not graduate or who take more than four years to complete their degree. More than 80 percent of those who default on student loans are students who did not graduate. While student loan debt is a complicated issue, the data suggest that increasing completion rates would have a tremendous impact on reducing debt. The task force recommends increasing student work opportunities, encouraging more Advanced Placement courses, more parent involvement, better engaged faculty and giving grant money to a student earlier in their academic career.
Working to reduce costs to students - including reducing the time it takes to complete a degree - while helping match the investment to expected returns can have a significant impact in reducing the actual “burden” of debt students are carrying. The return on higher education is extremely beneficial but students must take responsibility for where they choose to go to school and what programs they pursue. Debt itself is not inherently bad, but if not managed well can become an exceptional burden.
The task force recommends requiring undergraduates to complete a personal education plan, providing new opportunities for competency-based learning credits, increasing incentives for timely graduation, re-examining campus cost structures and creating better assessment tools for coursework completed elsewhere.
A major obstacle to students acquiring and managing an appropriate level of debt is the lack of transparency and accurate information on which to make sound decisions. Inaccurate, incomplete or untimely information raises the risk of students making poor academic and financial decisions, potentially leading to greater debt, reduced ability to pay and a lower likelihood of earning a degree. Improving the delivery of information and getting it to the proper people at the proper time can significantly improve the educational decisions of students and their families. Better decisions will decrease risk and lower the number of individuals who are struggling with the student debt they carry.
The task force recommends building on the MyEdu application, an online platform to help students plan and manage their college experience, and offering personal finance training and enhanced financial aid statements.
Student debt is one of the most critical issues facing young people today. If used wisely, student loan debt can be an important and effective tool for improving opportunity through a college degree. But, if that debt becomes unmanageable, it can create a lifetime burden that affects one’s employment and lifestyle decisions for years. This report provides an objective, evidence-based consideration of the issues and recommended solutions for consideration by university officials, policy makers, interested groups and the public.
The Board of Regents is scheduled to convene at 10:30 a.m. (CST) on Thursday, Dec. 6, in Austin. The meeting will be held on the ninth floor of Ashbel Smith Hall, 201 W. 7th Street.