Addressing the Student Loan Crisis

WASHINGTON-The rising crisis with student loans among African Americans was debated during the Congressional Black Caucus’s annual Legislative Conference

As part of the conference’s Emerging Leaders Series, experts from the public and private sectors of the student loan industry examined trends in college funding, including ways to reduce post-college debt and recent government initiatives aimed at helping students fund college.

Panelists also used a portion of the panel to highlight some of the alarming trends for African Americans when funding their college education.

For instance, African Americans use student loans to finance college at a higher rate than any other group, with about 65% of students receiving loans, according to the U.S. Education Department. As a result, African Americans leave college with higher amounts of student loan debt than students of other nationalities.

“African American students face tremendous challenges to getting through college,” says Ryan J. Davis, Research Analyst at the Pell Institute for the Study of Opportunity in Higher Education. “We need to think through and determine strategies so that trends we faced in the last 30 years don’t repeat.”

Borrowing in this recession is riskier for students in earlier, more economically prosperous times, when there were healthier job markets to support the borrowing. Now, as the nation’s unemployment rate hovers near 10%, education finance experts fear today’s borrowers might not have jobs to repay the loans.

“There is concern that the jobs that I had, and my colleagues had, might not be there today, ” says Kenneth Redd, Director for Research and Policy Analysis for the National Association of College and University Business Officers. “We’re trying to help students that are coming up in the next generation.”

Zakiya Smith, confidential Assistant in the Office of the Under Secretary in the Department of Education outlined some of the measures the Obama Administration has enacted or proposed to help students.

“The Department of Education has been thinking about how students fit into the labor force to create jobs that benefit the recovery,” Smith says.

In addition to creating jobs, Smith said the Obama Administration in its recent economic stimulus package increased the Pell Grant award maximum by $500 to $5,350. Smith also listed several tools available online to help borrowers manage their debt.

Financial aid/literacy expert Dawn McCoy offered tips to students and borrowers. McCoy urged both borrowers and lenders to be socially responsible when considering a loan. Among her tips for students who do borrow, McCoy says student borrowers should be “creative and thoughtful” about financing their education and should first seek alternatives to loans, such as scholarships and grants.

McCoy also said students should manage their student loan debt by repaying loans and being mindful of financial tools available to them.