It is an understatement to say the debate around student debt has been a hot topic in recent years. There has been significant political and press attention to the issue, and with good reason, as some borrowers, especially those who did not graduate, have struggled with payments in the recent economic environment. However, like any hot topic, the discussion has overheated, allowing anecdotes to drive the story.
As an example, the average of debt levels in media anecdotes are three times the actual amount according to federal data. Unfortunately, the facts sometimes aren’t “good” enough to make a good story, leading some to build narratives around anecdotal outliers.
Our company, Navient, this week found itself the object of a report that sounded so “good,” it was apparently “too good to verify.” The Intercept reported that lobbyists had created an ad attacking the Consumer Financial Protection Bureau on our behalf and for our benefit.
They did not reach out to check their facts or ask for comment, but if they had, we would have told them before running the story that Navient had zero involvement in the ads
They did not reach out to check their facts or ask for comment, but if they had, we would have told them before running the story that Navient had zero involvement in the ads and the lobbyists in question would have told them that they were unaware of the ads until the day they aired.
With 43 million Americans owing $1.2 trillion, we understand the focus on how student loans are being serviced. It is a priority we share, not a concern we are trying to fight, as some would make it seem. In fact, we recently provided recommendations to the CFPB and the Department of Education on how the borrower experience and repayment process can be improved. We have also outlined best practices of successful borrowers. We follow strict requirements from federal regulators on how we service loans, and we wholeheartedly agree there is room for improvement in the rules.
Against this backdrop of growing concern about the burden of student loans, we see that an increasing number of the solutions being advanced focus only on the back end of the borrowing process.
By the time a student borrower becomes our customer, they have already picked a school, borrowed money from the federal government, and paid the tuition set by their university. When it’s time to begin repaying the loans, they are done with schooling and may or may not have a job.
Non-engagement is also an issue: 90 percent of federal loan borrowers in default did not respond to outreach during the year of missed payments leading up to default.
To address this challenge, we use data to figure out who needs extra help when and with what message. That’s one reason Navient’s default rate is 38 percent lower than our competitors and why we are a leader in enrolling borrowers in Income-Driven Repayment Programs.
There are many solutions available, but none of those solutions include a time machine to borrow less, pick a cheaper school, or select a major with more demand in the job market.
If we want to really address the challenge of student debt we need to focus on how much people are paying and borrowing for college, not just the tools to help them pay it back.
If we want to really address the challenge of student debt we need to focus on how much people are paying and borrowing for college, not just the tools to help them pay it back. We need to focus more time on educating students on the decisions that they are making, our universities need to take a hard look at how they are spending money, and the government needs to think twice about allowing students to take on loans they know people can’t pay back.
And yes, servicers need to do the best job we can helping people meet the responsibilities of paying for their education when they are done.