U.S. Secretary of Education Betsy DeVos on Tuesday warned of “a crisis in higher education” while referring to management, administration and distribution of Federal Student Aid (FSA).
DeVos, while speaking at the annual Federal Student Aid (FSA) Training Conference in Atlanta, called for changes in the aid program saying that most of the loans are either “delinquent” or in “default.”
“Our higher ed system is the envy of the world, but if we, as a country, do not make important policy changes in the way we distribute, administer, and manage federal student loans, the program on which so many students rely will be in serious jeopardy,” DeVos said.
“As for FSA’s portfolio today, too many loans are either delinquent, in default, or are plans on which students are paying so little, their loan balance continues to grow. Ultimately, 43 percent of all loans are currently considered ‘in distress.'”
While commending the launch of myStudentAid mobile app that allows applying for student aid program, DeVos said that in near future, the students would have options on the app to see the repayment options and the amount they owe at any moment of the time.
“One major goal of the NextGen initiatives is to facilitate a partnership with you to improve student financial literacy. Imagine how students would benefit if they could easily and continually plan and budget for their education, if they could seamlessly access personalized insights about the outcomes of the program they are considering or in which they are enrolled,” the secretary said.
The National Association of Student Financial Aid Administrators came out in support of DeVos and applauded her for raising the issue.
“We applaud the Secretary for highlighting a national issue that is affecting millions of students and families across the country. We agree with her assessment that it will take a joint effort between schools, students, lawmakers, researchers, federal agencies and others to reduce the negative impacts of over-borrowing,” NASFAA President Justin Draeger said in a statement.
“The financial aid community stands ready to work with policymakers to find and implement solutions that will help keep college affordable without burying families in levels of debt that cannot be repaid,” he added.