Yes, this was my view of President Obama on Wednesday morning as he made his announcement about new changes on student borrowing and loans. (Side note- I was 50 feet from him- it was AWESOME!) The announcement was also featured in Inside Higher Ed and The Chronicle. His speech was very down to earth and easy for a college student to understand that the government is trying something to help them reduce their student loan debt and if potentially their loan payments are lower, they are able to do some thing to jump start the economy like buying a house or having money to spend on other things. In reading some comments on each of the articles, people are assuming that these changes to lending to students will get them jobs. Obama said nothing about that today. He did talk about his frustration with congress not passing the job bill. What I took from the his speech today was these changes will potentially free up some money made by college graduates to use towards spending in the economy. More spending will boost the economy and lead potentially to getting out of our recession. He did not say this would solve it but it is one way it might help both college graduates and the economy. Does not sound half bad to me....
The other point that no article has seemed to touch on that I have read is another part of the plan called "Know Before You Owe." This is a one page handout explaining financial aid options to beginning college students. I'll be curious to see what this looks like and how informative it really is, however, I am very excited at the idea especially because I was just in a conversation about who's responsibility it is to educate students about borrowing. But if it's anything like the tuition calculators mandated to college and universities, it might confuse people more.
I don't know how this plan is going to work and if we as a nation can financially afford it. And it makes me a little leery of things going on in Washington when the president is circumventing Congress and making Executive decisions. And like I said to my students as they were imaging how these changes will effect them, "we need to know more and know more about specifically who it will impact." Obama used the number 1 million students could see changes to their borrowing. 1 million students is not a lot in this country.
However, while we're waiting for answers, I think the thing I loved best about today was and is the reason I am in higher education. Of my 14 students, 10 went to the speech today and were excited and passionate about change in this country. They are getting the idea they are civicly (like all of us) responsible to help our government in this country (Obama asked us to tweet our congressmen to share our opinions- got a huge laugh and cheer from a room full of almost 4,000 college students) . And on the way back to our office after the speech they just asked questions, and made statements, and did some true critical thinking about what they had just heard from the President and how it might affect them. Any time I get moments like this I feel privileged and lucky. I did some asking of questions too and I loved watching their minds turn and turn.
So yes, I saw the President today make a good speech and announcement, and there is more to know about these new things, but more importantly I got to share it with my students. I am a lucky professional.
It is nice to hear about your students getting excited about political issues. I've often thought that this generation is less interested in civil action and making real change, however misguided that is. To see the occupy wall street protests has been encouraging, although only by a small minority of our students. I think I may be a bit jealous of you Amy. At the CC there seems to be less opportunity for our students to come together to fight for change. The commuter campus is kind of like that... Bummer!
ReplyDeleteI am interested to see the Know Before you Owe document as well. I know that when I took out loans I had to take a quiz. This was rather effective for me because I took the time to read it. My fear is that our students may not. I wonder if this form will help to clarify some of the rules and regulations that come with loans, although I expect that students will still be confused. I think this is especially low-income, first generation students, who (i'm generalizing) may not be financially savvy as some of their peers. To try to understand interests rates, sub and unsub, deferred payment is not a very simple thing. We'll see.
I too am really interested to see the "Know Before You Owe" document.. though I hope that it is an entire campaign of sorts, rather than a handout/static document... (we all know how well information in handout form is absorbed when tossed at students during an information-overload time of the year)! I'd like to see a cool interactive ap, perhaps a series of YouTube videos, or going back to Obama's tweeting encouragement this morning, a "hip" educational approach that employs social media or some equally 'cool' way of helping explain the implications of loans in a way that sinks in. Sure, there will be the requisite CYA handout too-- but hopefully we will be impressed with more than we can even conceive at this point.
ReplyDeleteI agree, 1 million students is not a many given the size of the country. Don't get me wrong, I like the idea however I wonder who will really benefit; if any students in the 4,000 strong crowd.
ReplyDeleteIt will be interesting to see how the delineations are made. Is it going to be for specific majors which cost more to train in such as medical? or will this only be for people in danger of defaulting on their loans?
As I mentioned earlier I like the idea however I get nervous when the promises are so vague.
Although I appreciate Obama's efforts to help student loan borrowers, I don't not feel as though these policy changes are going to be enough. This is all kind of confusing to be but from what I understand a borrower will be able to save up to .5% on interest rates. With the average debt around 27k this is less than $8 a month in savings. Loan forgiveness will go from 25 years to 20 years. Although this may help in the future I do not see it as having an immediate effect on our economy. Right now, there is an option of capping loan repayment at 15% of one's income. Obama promises to change this cap to 10%. However only current students are eligible for this benefit. Where does that leave the rest of us? Like i said I appreciate the effort but I think it is only a small step to a very large problem.
ReplyDeleteThis is an awesome announcement and it definitely has the potential to help add some money back to the struggling economy. However, there are other, better, options that were already available. Students could already consolidate their loans and take advantage of an income based repayment plan. The percentage of available students actually taking advantage of this option remains ridiculously tiny.
ReplyDeleteThe piece on educating students before they borrow is definitely an important one. As a first generation student, the guidance from my parents was not there, as they were learning along with me, and the college did little more than ask for a signature. Most students probably accept more loan money than they actually need. If we are able to develop and provide a successful training campaign in this regard, it could do wonders toward lowering the amount of loans that students are graduating with.
Braelin suggests that somebody develop "hip" apps that today's students can relate to. I think this is a great idea and I would challenge those in my cohort and in other majors (like educational technology) to take that charge and run with it! In the Greeley cohort alone we have two former mortgage brokers and a tax accountant. If the three of us cannot figure out how to get the basics across to students then I am not sure who could.
ReplyDeleteI think that we as student affairs people need to find a way to better inform all incoming students of finances. With all the cut backs in K12 education, the push for money management and accounting is not an elective taken, or even offered in places, anymore. Many schools are focusing on the core classes to get the students to college. For those who are first generation college goers, it makes the understanding of financial aid and credit cards even more complex.
ReplyDeleteWhy not include it in a freshman orientation program. It may not be 100% successful, but as long as it is out there for people to understand, it will be viewed differently. The NBA, NFL, MLB, and other professional sporting teams mandate all rookies to attend a money management class when they get drafted. This is due to the number of professional athletes that go broke after they retire...a report that states 78% do! http://www.usatoday.com/sports/football/nfl/2010-07-29-nfl-rookies-money-bankruptcy_N.htm
There is a consulting company that has started that goes around and talks to rookies to set up accounts so they make better financial decisions with their money. http://www.sportsmanagement.com/
Why can't that happen for college students as well?