NOVEMBER 18, 2013
Resources for Managing Student Loans
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)
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)
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.
Q: All right. We’re here talking as part of the Center for Household Financial Stabilities Conference, Generation Debt, the Promise, Perils, and Future of Student Loans. I’m here with Jennifer Mishory from Young Invencibles.
Jennifer Mishory: Yeah. Thanks so much for having me.
Q: So, Jennifer, if you would start. Could you tell us a little bit about Young Invincibles—its mission and what you’re trying to accomplish.
Jennifer Mishory: Absolutely. So I’m the Deputy Director at Young Invencibles. We’re a nonprofit organization focused on really ensuring that this generation has the same types of economic opportunities as other generations. So making sure that we’re working on access to higher education—access to healthcare—access to employment—all the types of issues that we see this generation facing. And, perhaps, differently than other generations did.
Q: Now, can you talk a bit about—when you say “this generation”—so what is your—what’s your general range of, I guess, individuals that you work with?
Jennifer Mishory: Sure. We actually work with young adults—ages 18 to 34. And that’s important because we work with students, we work with folks who are not in college or have graduated college or maybe never completed college. So we have a wide range of perspectives, and we really think that helps really give us a good perspective on our work.
Q: Great. So we’re here—and I know your organization, as you mentioned, touches upon a lot of issues. However, we’re here talking about student debt today.
Jennifer Mishory: Absolutely.
Q: So maybe we can cut to from where you see and where, you know, the Young Invencibles organization views it. What is the biggest issue facing students who are in this student debt—student lending marketplace?
Jennifer Mishory: Sure. I mean we really look at the student debt issue from two angles: The first is the front end. So, what are we doing on the front end to make sure that students make good choices—make sure that students know what kind of debt they’re taking on—know how much debt they’re taking on—know where to go to school so that it will make sense for them? We’re also looking at the front end around public investment in higher education. So the public investment per student has gone down the last couple of decades and certainly in the last five or six years. So looking at making sure that we’re talking about actually increasing investment on that end—increasing investment in grant aid on the front end for low-income students. And then we look at the back end. When a student’s leaving school, they already have that debt. In fact, they already have whatever debt they took out. And then we want to make sure that we’re actually getting them in to a repayment plan that works—that we’re providing the types of counseling for them so when they do hit a rough patch or they graduate into the Great Recession—which was—you know—really hit my generation hard—they know what their options are, and we’re actually providing support. When they’re having trouble with their servicers, we actually can help them, and we can tell them, “Hey, there’s the CFPB Loan Complaints System that you can go to.” So, making sure that we’re both providing them support on the back end and the front end.
Q: So, Jennifer, the student debt market is working for some individuals, and clearly, it’s a challenge for others. Can you talk a bit about the types of students for whom you see the current system working and, you know, are there specific characteristics of student that for whom you think it is probably most problematic?
Jennifer Mishory: Sure. I mean the student debt market—you know, it is certainly working for some students. In fact, a lot of students will graduate. And they’ll graduate with, you know, an average amount of debt, and they’ll get a job, and they’ll pay it down. And that’s great. But we also see a system where when we have something like the Great Recession—or we have something where a debtor, perhaps, didn’t finish college—or they went to a school that didn’t work for them or a school that has, frankly, a low return on investment—then that’s where they really see a lot of trouble. And so we’re really seeing a lot of problems for students who face those types of struggles. At the same time, we also see struggles for students who might leave, and maybe they are paying down their debt. But that means that they’re not doing other things. And so that’s where the broader economic questions come. So someone who’s graduated, they’re paying down their debt, they’re working—maybe they’re paying rent—they’re doing fine. They’re doing okay. They’re also not saving to buy a house—they’re not saving for a mortgage. And so what’s the broader economic impact of the student debt problem? And that’s something that, you know, we’re actually working to try and figure out.
Q: So we’re here in November. We’re six months out from high school graduation. So students who may be entering college and may be entering kind of this student loan debt cycle, so to speak—we’re looking at college students who are graduating—some who may have to now start paying on these loans, and they’re looking at grad school. So based on what you’re seeing, what advice would you give to some of these different groups that are kind of facing this student loan market or these different phases of their life?
Jennifer Mishory: Sure. I mean for folks that are looking to go to school and, unfortunately, have to take on debt, I would say look at Federal loans first. They tend to have broader consumer protections. And private loans tend to have higher interest rates. They don’t have the kind of income-driven repayment plans that Federal loans have on the back end. For students that are leaving, I would say make sure you know where all of your loans are and you know what kind of repayment plans are out there. There actually are some pretty good repayment plans available, particularly for folks who are struggling to find a job or maybe found a job, but it’s pretty low pay in those first few years. So, really, working with whatever resources you have available to make sure that you know what your options are when you leave.
Q: Now, if I can ask one final question.
Jennifer Mishory: Sure.
Q: When you work with—when you work with some of these students, is there something that comes up maybe more frequently than others? Is there something that surprises you, being in this space, when you say, “Wow. There’s a—I was surprised to learn,” having worked with students on this front that this is something they’re facing—or that this is a challenge that you may not have ever thought of prior to really engaging in this work?
Jennifer Mishory: Sure. I mean it’s not so much something I haven’t thought of, but it was—we actually did a nationwide bus tour about a year and a half ago. We went to 40 cities, 20 states, and we did 100 youth roundtables. And this was with students across the country at a variety of schools, community colleges, high school seniors, four-year schools, folks that had left school already. We asked them a lot of questions about their economic challenges. So, again, access to higher education, access to healthcare, access to jobs. And one thing that came up that we actually didn’t ask them—it just came up all the time—was, you know, “I wish I had more access to counselors and to people to help me navigate the system.” We’re actually facing a dearth of counselors. There’s about one counselor to every 476 students in the typical public school. So it was something that came up. Again, was not a question we asked, but it was a question that came up over and over and over again.
Q: So, Jennifer, you’re going to be part of a panel during today’s session titled The Future of Student Loans and Financing Higher Education. Can you talk about some of the reforms that you’re seeing in this space that you find most interesting and most promising?
Jennifer Mishory: Sure. I mean one thing we’re going to be working on is, you know, working with students to lift up their voices [unintelligible 00:07:13] actually public investments in higher education. And I think that’s—that goes, again, to sort of the front-end look at how we’re financing school. But on the back end, we’re actually talking a lot about how we can use some of the income-driven plans that we have—this income-based repayment pay as you earn. I think you’ve heard that come up today already. And how we can make that more of a default option so that students are automatically enrolled in a plan where they’re paying back based off of what they can afford. And that’s sort of a simplification that we’re looking to really work on as we head into this period where we’re going to be reauthorizing the Higher Education Act.
Q: Well, thank you.
Jennifer Mishory: Thanks a lot.
Q: All right.