Carrie Warick, Director of Partnerships and Policy, National College Access Network
Troy Miller, Senior Researcher & Policy Analyst, Florida College Access Network
Washington is abuzz with news about student loans with many proposals to help those who are currently in loan repayment. Last month, President Obama directed the Secretaries of Education and Treasury to work to expand the Pay as You Earn (PAYE) income based repayment plan, increase awareness of borrowers of the various types of income based repayment options, and to evaluate student loan counseling resources.
These efforts could especially benefit Florida students who, despite living in a state with a reputation for having low tuition, more heavily rely on federal loans compared to their peers around the country. According to new data from the U.S. Department of Education, the average Florida borrower owes $26,461 in student debt, which ranks fifth highest among all 50 states. In total, the outstanding debt amount among Florida’s 2.3 million student borrowers currently exceeds $61 billion in federal loans.
Federal Student Loan Borrowing by State (click to view map)
The PAYE plan currently allows borrowers who took out their first loan in 2007 or later and were still borrowing in 2011 to have their loan repayments capped at 10% of their income and their outstanding debt forgiven after 20 years. The President has asked the Department of Education to determine new regulations by Dec. 31, 2015, to expand PAYE for those borrowers most in need of repayment help but whose current borrowing time frame does not make them eligible. The Administration estimates that by expanding the criteria to include direct student loan borrowers who took out loans prior to 2007 or not after 2011, the program could benefit as many as 5 million more students, including 318,000 from Florida.
The President additionally instructed the Secretary of Education to improve communication strategies with borrowers about the several different types of loan repayment options. Private partners such as H&R Block and Intuit as well as several professional groups including the National Association of Student Financial Aid Administrators (NASFAA), the National Education Association (NEA), and American Federation of Teachers (AFT), will also join the efforts to spread the word about income based student loan repayment options. Finally, the Secretaries of Education and Treasury will run a pilot program this fall that will test the effectiveness of student loan counseling, including the Department of Education’s Financial Awareness Counseling Tool.
The pursuit of better repayment options and resources for student borrowers in Florida is of particular importance because of the state’s loan default rate, which at 10.8% is 14th highest in the United States. To see the loan default rate for students attending specific Florida colleges and universities, visit the U.S. Department of Education’s College Affordability and Transparency Center’s College Scorecard.