The current administration continues its pursuit of student loan forgiveness. Besides multiple courts declaring the process the administration is implementing as unconstitutional and the objections of many who do not wish to pay for a debt with their taxes that they did not incur, a number of other issues arise.
Did students not complete their coursework and graduate? The Federal Reserve's Survey of Consumer Finances for 2019 found that for 43% of households with education debt, the person answering the survey questions did not have a college degree.
In 2021 PolitiFact confirmed a tweet from Rep. Alma Adams, D-N.C., stating, "Almost 40% of borrowers with student loan debt didn't finish their degree."
Also in 2021, CNBC's Abigail Johnson Hess wrote, "According to the National Center for Education Statistics, just 41% of first-time full-time college students earn a bachelor's degree in four years, and only 59% earn a bachelor's in six years. ... The college completion rate after eight years is just 60.4%."
ThinkImpact's Sandra Craft wrote in 2021 that "28% of the students drop out of college due to academic disqualification — failure to meet the set academic requirements."
Sallie Mae's "How America Completes College 2024" report, conducted by Ipsos, documents that currently "24% of undergraduate students are 'at risk.'"
Do students from universities with large endowments have loans?
Adam Looney, in a 2021 Brookings opinion piece, wrote, "In 2014 (the last year for which data was available), Harvard students owed $1.2 billion, Yale students $760 million, and University of Pennsylvania students a whopping $2.1 billion ... Students at other elite schools, like the University of Southern California, NYU, and Columbia, owed billions more."
These university endowments are in the billions of dollars: Harvard, $50.7 billion on June 30, 2023; Yale, $40.7 billion on June 30, 2023; Penn, $21 billion on June 30, 2023; USC, $7.46 billion on June 30, 2023; NYU $5.9 billion on Aug. 31, 2023; and Columbia, $13.64 billion on June 30, 2023.
Have some student loans been abused? Student loans can be used for a wide range of education expenses from tuition to living expenses.
But U.S. News & World Report reports some spending doesn't "make the cut." That includes spring break vacations, buying a car, or purchasing a residence — as confirmed by anecdotes from friends.
The National Association of Student Financial Aid Administrators in 2018 cited a New America report based on data from the National Postsecondary Student Aid Study for the 2015-16 academic year. The report found that "some college administrators and federal policymakers believe that students are borrowing to live lavishly."
Melinda Opperman in an April post on Credit.org wrote: "Recently, surveys hit the news suggesting some borrowers are using their student loan money to invest in cryptocurrencies like bitcoin."
NerdWallet reported fourth quarter 2023 government statistics for student loans. There were 6.1 million federal loan borrowers in school, 25.7 million in repayment, 1.6 million in grace period, 3 million in deferment, 1.2 million in forbearance, and 4.4 million in default. More than 10% defaulted on their loan payments.
In "I'm never paying my student loans back. Here's why," David Dennis Jr. reflects: "I made that choice. Just like I made the choice to take on the loans in the first place. Like myself, many borrowers used the three-year repayment pause to set their lives up as well ... Yes, they could have paid down loans while the interest was accruing. But many didn't."
An internet search is replete with companies that are recruiting and offering sign-on bonuses and assistance paying off student loans.
Military.com reported: "Currently, the Army and Navy will repay up to $65,000 of your student loans, and the Coast Guard will repay up to $30,000 with yearly limits. The National Guard's general repayment amount is up to $50,000, but as with any program, benefits can fluctuate based on funding issues."
Is there fraud? In 2019, the Government Accountability Office reported: "[S]ome borrowers may have misrepresented or erroneously reported their income or family size. ... fraud or errors in this information can result in the Department of Education ... losing thousands of dollars of loan repayments per borrower each year and potentially increasing the ultimate cost of loan forgiveness."
That was followed in 2024 with the GAO reporting: "Student loan guarantee programs may be more susceptible to errors and fraud because of loans that third parties issue and service."
I have to ask the following questions about "student loan forgiveness": How much of my tax dollars will go for students who did not complete coursework? Am I paying for billions in university endowments? Am I going to be paying for someone's new car, residence, or, worse, investments? Am I paying for people who "choose" to refuse fulfilling their obligations during "grace" periods or when options such as commercial employment incentives or military service are available?
Shouldn't we be putting more resources into oversight to identify fraud, waste, and abuse than holding those who abuse student loans accountable, rather than just writing them off?
The preceding column is the opinion of the author and is not the opinion of the U.S. Navy or the U.S. government.
John M. DeMaggio retired after 30 years of service as a Captain from the U.S. Naval Reserve Intelligence Program. He holds a Bachelor's of Science in Forensic Science from John Jay College and a Master's of Science from Whiting School of Engineering, Johns Hopkins University. Privately consulting in counterterrorism, forensic science, and investigations, he also conducts international counterterrorism training, having retired as a Special Agent in Charge and serving as Co-chairman, Investigative Support and Forensic Subgroup, TSWG, developing interagency counterterrorism technology. He is also an Op-Ed contributor for The Hill. He previously published "Mitigation of Terrorist Effects on Victims' Motivation" in U.S. Army Counterinsurgency Center Colloquium. Read John M. DeMaggio's Reports — More Here.
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