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Discussion, What We Know About Student Loans in the Eighth District and Nationwide

NOVEMBER 18, 2013

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view the conference agenda and presentation slides »

   Julie Stackhouse, Federal Reserve Bank of St. Louis (4:20)

   Rohit Chopra, Consumer Financial Protection Bureau (30:08)
   Keynote Q&A (8:06)
   Interview with Rohit Chopra (6:40)

Resources for Managing Student Loans
   Introductions (2:12)
   Paul Combe, American Student Assistance (7:02)
   Interview with Paul Combe (12:58)
   Vicki Jacobson, Center for Excellence in Financial Counseling (5:46)
   Marilyn Landrum, Missouri Department of Higher Education (3:58)

Resources for Economics and Personal Finance
   Mary C. Suiter, Federal Reserve Bank of St. Louis (3:10)

Research Panel:
What We Know About Student Loans in the Eighth District and Nationwide
   MODERATOR: William R. Emmons, Federal Reserve Bank of St. Louis (4:14)
   Bryan J. Noeth, Federal Reserve Bank of St. Louis (13:53)
   Kelly D. Edmiston, Federal Reserve Bank of Kansas City (9:17)
   Caroline Ratcliffe, Urban Institute (14:22)
now playing  Research Panel Discussion (35:46)

The Future of Student Loans and Financing Higher Education
   MODERATOR: Ray Boshara, Federal Reserve Bank of St. Louis (7:32)
   Sandy Baum, Urban Institute and George Washington University (11:06)
   Interview with Sandy Baum (7:23)
   William Elliott III, University of Kansas (13:12)
   Jen Mishory, Young Invincibles (8:37)
   Interview with Jen Mishory (8:01)
   Gary A. Ransdell, Western Kentucky University (11:35)
   Roundtable Discussion (40:21)


Below is a full transcript of this video presentation. It has not been edited or reviewed for accuracy or readability.

William R. Emmons: Okay. I’m going to ask the panelists to come up. And now, we have time for you all to ask questions. And while our panelists are gathering and as you put together some thoughts, I will mention that all of the presentations and a video recording of the entire symposium will be available on our Household Financial Stability website by the end of the week.

Male: Maybe sooner.

William R. Emmons: Maybe sooner, but we’re going to say by the end of the week. So, let me start off the questioning and I have one question for each of the panelists. And I think you’re miked there so you can respond.

First to Caroline, you found a lot of borrowers worried about their loans. Do you have any information from the survey or do you have any intuition is this productive worry or is it unproductive worry?

Caroline Ratcliffe: Well, I don’t know specifically from the survey. What we do know just from some of those earlier–oh.

William R. Emmons: Excuse me. Use it.

Caroline Ratcliffe: Oh, I’m sorry. So, we don’t have–yeah. Now, I can tell I’m miked.

We don’t have specifics from the survey. What we do know just more broadly from some of the earlier charts and it showed that, you know, for the younger generation, in particular, there’s lots of stress on their economics. There was a survey done in the early 2000s that looked at concern around student loan debt and it was more about do you feel burden by student loan debt versus are you concerned about repayment. And it was about the same percent, about 50 percent. That was in the early 2000s. So, there does seem to be a shift. We had sort of the same percentage, but this question was really more focused on worry about the ability to repay.

So, I think that there are a lot of family finances that are coming together here and that–but I think that some of these income based repayment programs could be particularly beneficial for families and that that could–in that term, it could be productive if it gets people to sort of think about in enrolling in these income based repayment.

William R. Emmons: Okay. Thanks. For Kelly and Wenhua. You found very young borrowers you defined as under 25 as being unusually likely to be delinquent. So, I’d like you to comment. Do you think this means that we’re asking young adults to repay too much too fast?

Wenhua Di: Recently, there is this discussion whether there’s a way to make the payments duration long like 30 or 40 years like a mortgage. And then, I don’t really–well, I think that’s an approach that probably will have some practical positive impacts on these young borrowers. And then, I really welcome comments on this approach and I look forward to see it in some kind of experiment with this approach.

Kelly D. Edmiston: Yeah. And I do think–I mean it’s been mentioned before that there are a lot of programs out there for young people to take advantage of who can’t afford to make those student loans payments, such as income based repayment plans, you can extend the payments out for 25 years, make a payment based on your income, pay for 25 years and then the rest of the debt’s forgiven. And but, I think one of the problems is, and I think this was mentioned too, is that a lot of students aren’t, when I say students, but I should say student debt holders aren’t aware of what all of their options are for help for assistance when they’re having trouble making their payment or paying off the debt.

William R. Emmons: Okay. And for Bryan. You showed that the median, and also in previous presentations, the median balance is less than $14,000.00. So, do you think maybe the worry’s exaggerated?

Bryan J. Noeth: Yeah. You usually see in the main stream media that, you know, you always get the stories that debts that are over $100,000.00. Just because the debt is at $14,000.00, it still might be difficult for some people to repay. I mean a lot of the, you know, a lot of the¬–we actually see high delinquency rates among, you know, community colleges, but they have, kind of, the lowest level of debt. So, you know, I think it’s kind of borrower dependent. I think, you know, well even though median most, you know, most balances are less than $14,000.00, it can still create problems for borrowers. So, I–you know, maybe the large numbers there are exaggerated, but there’re still payment issues.

William R. Emmons: Okay. Very good. What questions do you all have? Yes.

Brent Neiser: All right. Brent Neiser, National Endowment for Financial Education in Denver. Have any of the panelists thought about a choice architecture behavioral defaults and even maybe a secondary default if somebody reaches a certain type of trigger point that they’re defaulting into some pattern of repayment or another type of program? I withdraw the question.

Kelly D. Edmiston: All I can say is that we haven’t been looking so much at kinds of policy types of questions, so I’m not sure that I’m qualified right now to–

William R. Emmons: That’s–excuse me. That’s for the next panel. Hold that question. Okay. We had a question over here.

Amy Brown: Hi. Amy Brown from the Ford Foundation. I was thinking about some of the research on the racial wealth gap and one of the things that came out of that was the ability of white families or those with more assets to both help children pay for school and also help them after they graduated with rent money and other kinds of support. And I wonder if you all can add anything to that if that factored in to your analysis?

Caroline Ratcliffe: Yeah. I think it does. And in particularly when we see differences by race in terms of concerned about–I mean about having student loans, when you look at some of the data just on the actual percent of people who are concerned about repayment, minority families are more concerned about repayment. So, as I was saying, that on average, white families have six times the wealth of African American and Hispanic families. So, this really is resources that can be used to help people pay for college.

When you look at families, in terms of large gifts and inheritances, you see that white families, again, are five times more likely to get these large gifts and inheritances. And again, they can be used for not only, you know, education, but also, you know, to help with the down payment on a home and all these other things that help families build wealth. So, that initial step of wealth is a really important piece for some of the differences across races.

William R. Emmons: Okay. Yes.

Wenhua Di: I just want to add one–

William R. Emmons: Sorry.

Wenhua Di: . . . one observation in our results that those 45 and older actually they have higher, I mean looking at the regression results, they actually borrow more than those between 25 to 44. So, I was trying to make sense of this. I guess it’s possibly related to some parents picking up some loans to help their kids, as well.

William R. Emmons: Okay. We have a question here.

Paul Cormier: Hi. I’m Paul Cormier [phonetic]. A clarifying question, delinquency, it can be a serial event, so you can have people who are delinquent once and they are in repayment and you can have people who are severely delinquent or delinquent more than one time. In the definition you’re using is it a cumulative of those people who had their credit report hit by a delinquency, so even if they’re in repayment, they still have higher interest rates and other things because of the effect of that delinquency? Is that the same definition across all the programs?

Kelly D. Edmiston: It’s a snapshot in each quarter. So, if they were 60 days delinquent, maybe they didn’t make the quarter one and quarter two 2011 payments, it would show up as 30 days the first quarter and 60 days the second quarter. And then, if they paid it off, it would disappear. And then, if they ended up getting delinquent again, it would reappear in a later quarter.

Paul Cormier: It’s not accumulative of all [unintelligible at 00:09:30]–

Kelly D. Edmiston: It’s not accumulative. So, you know, we could find out if have they ever been delinquent on a loan, but that’s not something that we try to do yet.

Bryan J. Noeth: But, I might say the same exact thing. But, I should note that I used any past due it was 30 day delinquencies, so . . .

William R. Emmons: Yes.

Wenhua Di: Yeah, but definitely¬–

Male: Would no one know¬–

William R. Emmons: We’re trying to–

Male: . . . what the [unintelligible at 00:09:47]?

William R. Emmons: Press the button underneath on the microphone itself.

Male: I’m sorry. No affiliation. This question’s for Mr. Edmiston. From your slide, it showed from 2008 to 2013, the student loan debt went from 400 billion dollars to over 900 billion dollars in five years. Tuition rate went up, but did not double. Enrollments went up, according to your slide, but did not double. Can you give us a root cause of how it doubled in over 5 years?

Kelly D. Edmiston: I don’t think there was a root cause. I mean I think it’s a combination of causes. For example, enrollments have been increasing. All the people who are enrolled in school, the share of those who are enrolled who borrowed is a bit increasing. And then, for the average person who’s in school, his or her–the amount he or she’s been borrowing has been increasing.

So, all these factors are working together to cause a rather astounding increase in debt. So, I don’t think there’s a root cause that we can point to. I think it’s just like I’ll use the cliché in Perfect Storm where you have all these things happening at one time. Like just during a recession, for example, we don’t typically have more enrollments. So, there’s been more enrollments. Tuition’s been going up in some states anyway. State aid’s been going down or at least eight colleges have been going down or seem to be working to increase tuition. So, there’s been more borrowing. So, I think it’s really a combination of factors.

Male: With that extrapolating further out, do you see the student debt doubling again in the next five years?

Kelly D. Edmiston: I don’t think it will.

Bryan J. Noeth: Can I just add that, also, one of the things that is driving this is, I mean, you’re seeing like 10 percent more zero payments, so if previous people aren’t paying back their loans as quickly, that’s also going to push up student debt. So, there’s kind of a lot going on. You know? Looking forward, I will say that enrollment, you know, that the demographic shift looks like it might even out, so, you know, it’s kind of tough to tell probably, so . . .

Wenhua Di: I believe the most recent trends in the report by a college board actually suggest that from 2012 to 2015 that a [unintelligible at 00:12:14] nation has gone down.

Kelly D. Edmiston: Yeah. Yeah. And in fact from that point chart that I put out, you can kind of see–I didn’t make it real clear, but there’s been a deceleration in the disbursement of student loan debt. So, that’s kind of partly what I base my expectation on going forward.

William R. Emmons: Okay. So, you heard it here. Student loan debt will not double in the next, what, five years, 10 years? Okay, Spencer.

Spencer Cowan: Spencer Cowan, Woodstock Institute. With income based repayment plans, which in the mortgage equivalent would be extended the loan term, do you reach a point where without either principal forgiveness or an interest rate reduction, you’re essentially extended it so long you get to a negative amortization and the actual amount of the loan will increase?

Caroline Ratcliffe: Yeah. I mean I think with the income based repayment there has been some recent changes. So, currently it’s 10 percent of your income for 20 years. And then for people who could pay it off say in 10 years that they will end, you know, that’s the, you know, if you could pay it off in 10, but you pay off in 20, then you’re going to pay off more. But, the forgiveness that happens at the end of 20 years, there’s particular concern with people funding their undergraduate degree and then their graduate degree that there’ll be large loan forgiveness at the end of that 20 year period.

Kelly D. Edmiston: And Caroline, correct me if I’m wrong. But, I would be really surprised if there was an income repayment plan that allowed–that ended up in a negative amortization. Would you agree with that? I mean I don’t think that would be approved.

Caroline Ratcliffe: Right.

William R. Emmons: Okay. Yes?

Bob Hildreth: Yes. Bob Hildreth from FUEL Education. I was reminded by a kind of a constant mention of the $100,000.00 loan amount folks and so forth. Isn’t it, in terms of policy and in terms of research, important to desegregate undergraduate from graduate loans because they not only have dramatically different amounts, but they have dramatically different impacts?

Of course, we all know the case, $180,000.00 is the average loan for medical students and a college will typically have 80 percent of those students with severe debt, but we all know that certain types of medical professions can accommodate that debt whereas others cannot. You go to the legal profession and it seems like about of all professions, they have been most impacted by student debt as a dramatic decline in enrollments. So, it really–shouldn’t we really slice and dice this thing up?

Wenhua Di: Yes. I think I totally agree with you. And then, we do not have this information in our data and would love to have it. And then, actually a few speakers have mentioned today that those who are in default are mostly having lower balances, which indicates that they’re more likely to be non-completers who enroll in two years or four profit institutions and not in those professional graduate degree programs. And then, if we have that information, that would really help us to understand some of the questions we’re trying to answer.

Kelly D. Edmiston: And absolutely the–I don’t remember what the numbers are right now. It’s in a previous paper that I wrote that’s on our website. But, the difference between the delinquency rate between completers and non-completers is huge. I mean it’s astronomical and really, well, it’s like 17 percent versus like 3 ½ percent. So, that’s a big factor going forward. And like with our study, for example, you know, we’re trying to get better measures of retention and so forth in our paper because we know that’s got to be, you know, a big part of this factor on variation across states and delinquency rates.

William R. Emmons: Let me interject a question here for Bryan. Both from the panel and I think you’ve heard it in earlier talks, there’s this question of data and so Bryan, I know you’re quite familiar with the survey of consumer finances and with the New York Fed’s Equifax panels. So, what do you think are some of the limitations? The questions, for example, degree status or–

Bryan J. Noeth: Yeah. So, I actually agree. I think, you know, one of the problems is in none of these statuses do you really get a great idea of, you know, what degree people are actually holding. In survey consumer findings, you don’t even know who got the education. You know education by household, but you don’t know, you know, whose student debt it is. You know? And in the consumer Equifax, the panel, you actually don’t know at all what degree obtainment was. All you know is, you know, somebody’s age, their location, and then their level of payment and debt. So, yeah. As far as, you know, that’s kind of the dream is to (a) tie, you know, education, you know, the actual major, where you went to school, tied to debt and then, you know, going forward tied to outcomes, delinquency, stuff like that.

Kelly D. Edmiston: And I think a bigness in factor too when using the Equifax data reports is that income data isn’t reported to the credit bureau so that’s–we would love to have that information on the credit reports, but unfortunately it’s not there.

William R. Emmons: So, that’s really what–Kelly, you used the term, I think, opaque. The market is still very opaque. And I think Rowic’s [phonetic] comment, you know, the parallels with how opaque the mortgage market was 10 years ago is part of the thing that is concerning.


Sandy Brown: [Inaudible at 00:18:36].

William R. Emmons: Can you get your microphone, please, Sandy?

Sandy Brown: Sorry. Okay. I’m Sandy Brown with the Irving Institute in GW. You showed a graph of the increases in outstanding debt over time. And so, we’ve been talking about this as though it’s a new thing, but isn’t it right that actually over the first half of the past decade, outstanding debt grew more rapidly? And it’s true that the amount of annual borrowing has certainly gone down in the most recent year and maybe that will continue.

Kelly D. Edmiston: Yeah. So, it was growing rapidly a while ago. And then, if you look at cohort default rates, back when I was in college in the last 80s and early 90s, cohort default rates were 20 to 22 percent. Right now, they’re 9.9 percent. So, and there were some policies that were instituted and Sandy would certainly will be able to correct me if I’m wrong. But, there were some policies instituted back in the early 90s and if you look at the cohort default rates, I wish I could draw a slide up, they fall off dramatically until we had a recent climb because of the recession. But, they’re nowhere near where they were back in the late 80s and early 90s.

And that’s heartening in a way because it suggests that–well, one thing I think as the economy clears up, we’ll start to see those go down, but also it’s encouraging that some policies can be put in place that can end up having a dramatic effect on things like cohort default rates. So, just in some sense it isn’t that new. I mean we’ve actually been dealing with this problem for a long time. And so, it’s just kind of reared its ugly head and people are paying attention to it. Maybe that’s a good thing probably that the people are paying a lot of attention to it right now, but it’s a problem that’s been ignored.

Caroline Ratcliffe: Can I just add, I think maybe I wasn’t as clear during the presentation, but it’s true when you look at some of the averages, you see the increases over time, but if you look at the medians in student loan debt over time, if you look from the late–so, you look over 1989 to 2001, you see that at the median student loan debt doubled. If you look from 2001 to 2010, median value of student loan debt went up by 50 percent. So, I think that gets to Sandy’s point that sort of this–it’s increasing, but at a decreasing rate as compared to what we had seen previously.

William R. Emmons: Okay. Yes?

John Brandt: For Caroline. This is John Brandt from Missouri Baptist University in St. Louis. On the adult learn–I didn’t quite get the detail, but the data that you used that are currently repaying, well not just adults, but everybody, for somebody who would have repaid their loan, they would have dropped out of that. Is that correct?

Caroline Ratcliffe: Exactly.

John Brandt: Okay. So, it’s just that they were currently at that moment repaying the loan. Okay. Because with 38 percent roughly of all college students being non-traditional, post-25, that’s a very important piece in our student loan process these days.

Caroline Ratcliffe: Right. So, thanks for clarifying that.

John Brandt: All right. Thanks.

William R. Emmons: Any questions? Well, keep thinking. I’ll ask a question for anyone. At several points in the presentations was focused on what you might think of as particularly vulnerable populations, the very young, under 25 minorities, what do you think is going on with those populations?

Caroline Ratcliffe: So, I guess–so just thinking about the young, I mean, I guess there’s this student loan, but thinking about it a little bit more broadly about some of the other things that are hitting this generation in terms of their broader wealth building. So, we’ve got the increase in student costs. We talked earlier about we’ve got increasing costs and debt, but stagnant wages and we’ve seen declines in wages across the income distribution recently.

Also, I wanted to mention if we think about wealth building today, you know, the real cost of buying a home for this generation, getting into the housing market is different today than it was if we look at an earlier generation. So, we’ve got student debt. We’ve got the cost of homes. We’ve got stagnant wages. So, there’s lots of pieces coming together for the younger generation.

William R. Emmons: And African Americans, Hispanics?

Kelly D. Edmiston: I just kind of wanted to add, if you don’t mind–

William R. Emmons: Sure.

Kelly D. Edmiston: . . . Caroline, is that I–let me [unintelligible at 00:23:26] here. I have not seen this analysis so I can’t tell you whether it was good analysis or not. It’s just something I saw in the newspaper. But, the AP, the Associate Press, did an analysis. And I don’t think this is too far off probably. But, they did an analysis that suggested that 50 percent of all young people coming out of college are unemployed or underemployed.

So, they’re either unemployed like technically unemployed or they’re discouraged and stayed at home on the couch or they’re working at a job that’s not [unintelligible at 00:24:03] with their skills and experience. So, obviously, you know, they’re not going to be paid the wages they might be–they’re going to be paid very low wages for very low skill work. So, they’re getting the kind of jobs that normally people who wouldn’t have college degrees might have gotten.

So–and again, I haven’t looked at the analysis, so I mean there could be a major flaw in it. But it seems reasonable to me that 50 percent are in that situation and if that’s case, at least if they’re in that quarter of people who are making $400.00 student loan payments, then I would certainly think that that would be a problem.

Wenhua Di: Yeah. I would add–well, I’ve read–the–actually a reports on Texas student loan borrowers and I found it might have something to do–well, have something–some discussion about minority borrowers. For some ethnic race group, I mean, the culture–well, their culture don’t like to borrow much or want to stay closer to homes.

And then–and for some families they only borrow a little bit and then they stay at home or work full time far from school and then they won’t be able to participate fully college life. And they take courses and sometimes have to do other things for the family and then that really becomes a big factor to non-completion and then that can cause some issues for some recent ethnic people. So, that’s because of the, you know, the culture, the expectation.

William R. Emmons: Hm-hmm. [affirmative] Caroline?

Caroline Ratcliffe: Can I add–

William R. Emmons: Sure.

Caroline Ratcliffe: . . . just add broadly that the wealth, again, of families of color and white families. So, when we look at the impact of the Great Recession on different families of color and white families, we see that African American and Hispanic families were hit much harder by the Great Recession as compared with white families. That the wealth fell like 40 percent between 2007 and 2010 for African American families, but for white families it was about 10 percent. So, they were hit harder. Hispanics, in particular, were hit hard in housing. African Americans were hit hard in retirement savings, particularly for people who lost their jobs, pulled money out of retirement.

And then, what we also see over time is that minority families aren’t on the same wealth building path, so they’re not getting into retirement savings. They’re not purchasing their homes as early, so when you look at those wealth trajectories over time, you see that, you know, white families have this nice increasing path over time and African Americans and Hispanics just don’t have that same kind of path. That when you look at families in their 30s and 40s, white families have about 3 ½ times the wealth of African American and Hispanic families, but by the time they reach their 60s, the peak of their wealth building years, it’s 7 times. So, there’s really a lot of differences in the disparities increasing over time.

William R. Emmons: Okay. Yes?

Winford Fells: Winford Fells [phonetic] of There are Ways to Dream’s Fund. I’m interested you said that the cohort default rate has, you know, decreased tremendously, but we’re looking at a student population you said graduates that, you know, half of which are either un- or underemployed. So, it leads me to wonder if we are accurately capturing the impacts of the student loan debt. If the student is unable to make the loan payment, someone is clearly. Are we capturing impacts on families, say, based on retirement and things like that?

Kelly D. Edmiston: Well, first of all, let me speak up, when I was talking about the cohort defaults, but in recent years it’s been going up. So, I didn’t mean to imply that there was this continuous downward movement. What I wanted to make note of was that at one point back in the late 80s and early 90s was really when it kind of dropped rather sharply, but since in 2007 or so, it’s been going up. And what was the second part of your question? What are we capturing?

Winford Fells: Are we accurately capturing the impacts of the debt if we know that sometimes the debt is being paid and the student is unable to do so?

Kelly D. Edmiston: Yeah. I don’t know really. I don’t think that if someone else is paying the debt, we wouldn’t see that in the credit reports. But, we could and we have done this, but I mean we can look and see whether they’re getting more [unintelligible at 00:30:04] or not and whether they’re getting car auto loans or not and things like that. So, I think that’s more work to be done in terms of what you were suggesting, but that’s not anything that we in particular have looked into.

Bryan J. Noeth: And can I say that the cohort default rate is just a two year rate, so it’s only did you default within two years. So–and, you know, you think now with, you know, forbearance and delinquency and the default, I believe, it’s calculated as a 270 days past due. So, you know, it might be that these people still aren’t making payments, but, you know, that might not show up in the default rates. Somebody has a [unintelligible at 00:30:42]–

William R. Emmons: Yeah. In fact, we know we have lots of experts hidden out here. For example, Willie Elliott I think probably has some information to share on this.

Wenhua Di: I think we had it [unintelligible at 00:30:52] that–

William R. Emmons: I wanted to hear from Willie a bit first.

Willie Elliott: Yeah. I think that there’s been–we’ve done some recent studies actually in the Federal Reserve review looking at the effects of student debt potentially on home ownership. In this case, it was net worth we looked at. But, then there’s also been some other recent students done by Hiltonsmith Demos that also looked at retirement over the life course. So, I work with more short term and Demos works with more long term.

And there’s been a couple other studies more recently released as well. So, there is a growing interest in this and research being done around it. I think it is an area in which there’s more research needed, but I think the strong reasons, and I don’t want to give away all my fun for later. I’m talking later. I’m speaking more on this. But, there are reasons I believe for thinking about the impacts of debt, particularly on asset accumulation, that we really give stronger consideration to.

William R. Emmons: Yes.

Male: Just a point because talking about the cohort default rate it gets to the question that wasn’t answered about re-default and so on, because one of the remedies for students, which is very good for them, it’s called Rehabilitation. And what that does is allow the student actually to get their credit clean. They get back into repayment. The loan is in good standing and so on. So, they can re-default. So, when start looking at these statistics and thinking about wealth generation over time, you have to think of the longevity. This is the same point about delinquency in cyclical delinquencies. You know? Because all those things stretch the loan payment out, stretch the amortization schedule out. It’s no longer 10 years and that effects the ability to accumulate this, especially if their credit’s been hurt several times.

William R. Emmons: Okay. And we had a question here.

Rebecca: Hi. My name is Rebecca. I’m a student at St. Louis University. My question is to Ms. Caroline. You mention that the student loan that is most likely held by young people and minority, you specifically stated that African American’s hold the percentage of 34 percent and Hispanics 28 percent and you also mentioned that the Grand Recession affected Hispanics and African Americans more. But what impact does this have on their ability to repay? There was also mention about how culture expectations might be different. However, you also said that the wealth path might be different from white households. So how does that–is there a way to separate the delinquency rate among minorities and white households?

Caroline Ratcliffe: Yeah. So, there’s a lot tied up in that question. It is a very complicated question, how to pull these different pieces apart. But, you know, part of this repayment for the student is going to be tied to their income. And we know that we’ve got lower and stagnant wages in recent years. When we look at income–so I mentioned the racial wealth gap, we also have a racial income gap. It’s not as great, but white families have about twice the income on average as African American and Hispanic families. So, that piece ties into this and so that–but for the repayment piece it is their wages, but also, as someone brought up, the ability for help from family when the income’s not there to pay back. So, they’re not in one of these income based repayment programs, it’s like what’s the network around that individual to help them meet their obligations and that is going to be lower for minority families as compared to white families on average.

William R. Emmons: Okay. I’m going to announce last call. So, I want everyone who has a question to raise your hand and we’re going to recognize everyone, get your question on the table, and then our panel will respond with as much time as we have. Okay. If you have a question, please raise your hand and state it. Yes?

Male: The national average for cohort default rate you said was nine point something percent. Is it true that at private universities it’s still around 22.7? I saw a report six months ago that at private universities, the national average.

William R. Emmons: Okay. Let me see. Is there anybody else with a burning question?

Kelly D. Edmiston: You four profit universities.

William R. Emmons: Okay. Well go ahead, Kelly. That may be our last question. I’m sorry. I spoke over your answer.

Kelly D. Edmiston: No. It’s–that’s true for four profit universities. For private non-profit universities, the cohort rate’s actually lower than it is for public institutions.

William R. Emmons: Okay. Thank you. Willie, last word.

Willie Elliott: If I could put one question out there for the panel and everybody else. Is the only goal and way to look at student loans is as if it is a goal of ours to make sure that people can pay back their loans? I mean is that the benchmark that we create loan repayment plans and stuff like that so they can pay back their loans? Is that the real goal for the program?

William R. Emmons: Yes. That’s a question for the break, to think over. What are we trying to accomplish in financing higher education and how we do that? So, I’ll invite you to take a break outside and let’s reconvene promptly at 4:00. Thank you.