A recent report from the Center for Responsible Lending highlights the challenges of student debt and the challenges this creates for North Carolina graduates and the broader economy. It also highlights potential solutions. In light of recent policy discussions about the pressing issue of college affordability, the findings are particularly important to any policy decisions. Here are the highlighted findings:
- While only 5% of North Carolina students attend for-profit institutions, these students are disproportionately low-income and African-American. NC for-profit students also have higher levels of student loan debt and poorer outcomes compared to other higher education institutions in the state. North Carolina for-profit schools have also faced several complaints and investigations at the state and federal level. For this reason, we recommend that North Carolina improve oversight of for-profit schools by requiring the institutions to report on how much they spend on tuition versus advertising and salaries, and improve other reporting requirements.
- Historically Black Colleges and Universities continue to play a critical role in educating students of color and low-income students in NC, with lower financial costs than for-profit institutions, and better outcomes. For example, the average completion rate at public HBCUs is almost 3 times greater than the for-profit sector. We recommend that NC increase focus on funding HBCUs and support better marketing for HBCUs so that they can overcome recruiting efforts by the less successful for-profit schools targeting the same student population.
- If North Carolina develops its own student loan refinancing program, an idea growing in popularity, it should focus that program to ensure it is competitive with existing federal options that work well for many borrowers, and provide rigorous loan counseling to ensure borrowers do not give up rights and privileges that come with federal loans. It is important to bear in mind that refinancing programs do not provide significant relief for low-income borrowers, who are struggling to repay small debt loads due to low earnings. It is also important to recognize that federal repayment programs already serve many graduates from public colleges and universities well.
- The paper also recommends that NC consider implementing registration of student loan servicers and oversight of servicers and creating a student loan ombudsman at the state level.
To read the full report, click here.