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The Student Loan Restart

What the supreme court's rejection of student loan relief means for borrowers.

Cory Turner

In one of the most anticipated decisions of its current term, the U.S. Supreme Court has struck down President Biden's sweeping plan to discharge some or all federal student loan debt for tens of millions of Americans.

In a 6-3 decision, the high court ruled that the Biden Administration did not have authority under a 2003 federal law to forgive hundreds of billions of dollars of student debt.

"The HEROES Act allows the Secretary [of Education] to 'waive or modify' existing statutory or regulatory provisions applicable to financial assistance programs under the Education Act," the ruling states, "but does not allow the Secretary to rewrite that statute to the extent of canceling $430 billion of student loan principal."

In a decision written by Chief Justice John Roberts, the court ruled in favor of Missouri and five other states, who had argued that the Administration had overstepped its authority to forgive some student loans.

The "modifications" by the Department of Education, Roberts wrote, "created a novel and fundamentally different loan forgiveness program" that "expanded forgiveness to nearly every borrower in the country."

The high court's decision comes after a tumultuous year for federal student loan borrowers, who were told in August by President Biden that the U.S. government would cancel up to $20,000 of debt for anyone who had received a Pell Grant to attend college, and up to $10,000 for the vast majority of remaining borrowers.

That August announcement came after months of speculation that the president would act, and its warm reception by younger voters may have contributed to Democrats' better-than-expected showing in the midterm elections. But the proposal was also beset by a host of Republican legal challenges that ultimately led to the Supreme Court stepping in.

While much can be said about the court's decision – and no doubt will be in the coming days – here are five things to know about what it will and won't mean for borrowers and the country.

1. Millions of borrowers are feeling collective disappointment

Biden's plan would have provided relief to most federal student loan borrowers – as many as 43 million people. That's roughly one in eight Americans. Nearly half of those borrowers, roughly 20 million, could have had their student loans erased completely.

A look inside the legal battle to stop Biden's student loan relief

Whatever you think of Biden's proposal, in this moment, the collective disappointment and perhaps disillusionment of so many Americans is palpable and worth acknowledging.

"I feel like it's back to business as usual," says borrower Kurt Panton, with a long sigh. "What else can I do? Go back to paying the student loan that I have been paying for 20-plus years."

Panton took out federal student loans to pay his way through college and dutifully made monthly payments from late 2003 until March 2020, when the pandemic payment pause began.

"There is this mental weight that you carry with a student loan, knowing that [it'll be with you] as far as you can go into your foreseeable future," says Panton, who became a father late last year and says the money he's saved not paying down his loans over the pause has helped support his young family. "I haven't been having crazy parties for the last three years because I'm not paying back my student loans. You know, I'm not eating a goose for dinner every night."

"It's really tragic that student loan borrowers have been stuck in this position as political pawns," says Persis Yu of the Student Borrower Protection Center, "and now are victims to a politicized court that is willing to jeopardize their financial security for political gain."

The Student Borrower Protection Center is one of a handful of advocacy groups that have been vocal in their support of debt relief, and have put pressure on President Biden to be as generous as possible. The NAACP also pushed hard for relief.

"I see it as an unfortunate reality that in a country where we bail out Fortune 100 companies, where we bail out banks that have not been good actors, that this Supreme Court would allow that to happen, and yet," says Derrick Johnson, the NAACP's president and CEO, the court would choose to leave millions of borrowers "stuck in a vicious cycle of debt."

In the lead-up to the court's decision, Johnson sent a letter to Biden , advising him, in the case of an unfavorable ruling, to "pursue all legal pathways" to erase student loan debts.

"Let us be clear," Johnson warned, "absent further, swift action in the wake of an unfavorable ruling from the Court, Black voters stand to be incredibly disillusioned by an Administration who failed to deliver on key campaign promises but succeeded in widening the racial wealth gap."

2. It's a win for Republicans who opposed Biden's loan cancellation plan

Not everyone is disappointed with the court's decision.

Joe Biden's student loan forgiveness plan will cost $400 billion, budget office says

Many Republicans had fiercely opposed Biden's plan, calling it an abuse of executive power and an enormously expensive handout to college-educated Americans. The Congressional Budget Office estimated the debt relief plan would cost about $400 billion over the next 30 years.

"I'm very pleased that the Supreme Court is following the Constitution," says Rep. Virginia Foxx of North Carolina, the Republican chairwoman of the House education committee. "What the president has done is take on the role of Congress by deciding through a rule to appropriate money from the taxpayers to people who willingly took on a debt. And I think what he has done is totally illegal."

While Republican opposition was fierce, a majority of the public (55%) supported forgiving up to $10,000 per person in federal student loan debt, according to a June 2022 NPR/Ipsos poll .

3. Borrowers will soon have to start repaying their loans again – and it could get ugly

Tens of millions of borrowers who had hoped to have some or all of their federal student loans erased will soon be asked to resume repayment.

Senate passes GOP-led resolution to block Biden's student loan relief plan

Recent legislation to prevent the federal government from defaulting on its debts included a requirement that borrowers begin repaying their student loans at the end of August. Though even before that legislation, the Biden Administration had committed to a similar timeline .

According to an Education Department spokesperson, student loan interest will resume on Sept. 1, and payments will be due starting in October.

The problem now is, most borrowers are out of the habit. In fact, many have never had to make a student loan payment. According to federal data , roughly 7 million federal student loan borrowers are 24 years old or younger, which means they were at most 21, and in many cases still in college, when the current payment pause began in March 2020.

Making matters worse, many older borrowers will have a new loan servicing company – not to mention they may have forgotten their online portal passwords; some may not have even checked their balances in months, if not years. Those days are coming to an end.

At greatest risk of falling through the restart cracks are borrowers who were given a chance at a so-called "fresh start" during the pandemic . For these roughly 7.5 million borrowers who are in default, the department is offering protections from involuntary collections on their accounts and the chance to regain access to flexible repayment plans. But, to benefit and get out of default, these "fresh start" borrowers must opt-in to the program and contact their loan servicer.

According to the department , these defaulted borrowers are disproportionately likely to be economically vulnerable, first-generation college students. And there is considerable concern among advocates about the department's ability to communicate these opportunities to borrowers in default, and borrowers' willingness to return to repayment after years of default.

That concern stems, in part, from NPR reporting in January that revealed serious funding shortfalls inside Federal Student Aid (FSA), the Education Department office tasked with managing the government's student loan portfolio.

Exclusive: New Biden student loan plan unveiled amid agency funding crisis

At the very moment FSA and its loan servicers will have to navigate an unprecedented flood of borrowers returning to the system, the agency is actually cutting costs and services.

4. "It is possible that loan servicers may be overwhelmed"

After a political fight between Democrats and Republicans over Biden's debt relief plan, Congress flat-funded FSA for this year, making it all but impossible for it to keep up with its many student loan responsibilities.

Already, the agency has quietly delayed an effort, promised by the Biden administration, to review the loans of millions of borrowers who were unfairly set back by years of mismanagement around income-driven repayment plans. Promised in May, that review has been extended into 2024 .

And that review is a logistical cakewalk compared to the Everest of helping millions of borrowers – whose loans have been paused for more than three years – navigate the return to repayment.

Many borrowers' financial situations have changed, and their repayment options will need to change as well. Call centers will need more and better-trained workers in anticipation of the months-long onslaught of calls they'll face from confused and anxious borrowers.

Instead, however, the Education Department has cut funding to loan servicers, according to multiple sources familiar with the cuts, and is allowing them to scale back call center hours .

"We are fully committed to supporting student loan borrowers as they successfully navigate returning to repayment," says a department spokesperson in a statement to NPR. But the statement also acknowledges: "the Department is deeply concerned about the lack of adequate annual funding made available to Federal Student Aid this year. As the Department has repeatedly made clear, restarting repayment requires significant resources to avoid unnecessary harm to borrowers, such as cuts to servicing."

Industry experts outside the Education Department are more blunt.

"It is possible that loan servicers may be overwhelmed with a high volume of inquiries," says the National Association of Student Financial Aid Administrators (NASFAA) in a warning to borrowers . "It is possible you may not reach your servicer via phone the first time you call, and you may need to call a few times before getting connected."

"The consequences of returning to repayment under the current funding system are going to be disastrous," says borrower advocate Persis Yu, who points out that the student loan system functioned poorly even when it was fully funded and there was no need to help borrowers return to repayment.

Yu warns, unless Congress gives FSA more funding, this transition could be a "trainwreck."

On this point there is even some bipartisan agreement.

Foxx, the House education committee chairwoman, says she too worries about the return to repayment because the department is "terribly managed." But, she says, "I don't think there's much sympathy to give more money to the department... It's using its money inappropriately, using people inappropriately. And something has to be done about that."

5. Student loan debt is growing to keep up with college costs — and Biden's plan wouldn't have changed that

Before publishing this story, I pre-wrote two different versions: one if the court had preserved Biden's debt relief plan, another in case it scrapped it. Both versions had the same ending.

Biden's debt relief plan, as generous as it was, would have done nothing to address the growing levels of student loan debt borrowers are taking on. The U.S. government will continue to issue loans to help Americans afford college, even as colleges raise prices, forcing Americans to take out even more loans.

"I recognize that our current system is broken," U.S. Education Secretary Miguel Cardona told lawmakers in May.

Foxx echoes that sentiment: "The system is totally broken and has been broken for a long, long time," she says, highlighting Republican efforts at one fix that would limit interest on student loans.

The inflation-adjusted cost of college has nearly doubled since 1990 , from about $15,000 a year to $29,000 in 2020. And students are using loans to keep up. Between 1995 and 2017, federal student loan debt "increased more than sevenfold, from $187 billion to $1.4 trillion (in 2017 dollars)," according to the nonpartisan Congressional Budget Office.

The Biden administration does have a plan to address that brokenness, and it hinges on a newly proposed, much more forgiving income-driven repayment plan – one that has drawn praise from borrower advocates and sharp criticism from Republicans.

Even if the administration is able to roll out this new plan, though, it's unclear how quickly it could be available to borrowers returning to repayment.

What's more, implementing a new income-driven repayment plan that is radically different from the status quo will require incredible investment and support for borrowers. Again, loan servicers' call center employees are the voice of the federal student loan program, and the system will need more of them, and they'll need more training to implement any new repayment plan. The fact that servicers are being told to slash service right now is not a hopeful sign.

Edited by: Nicole Cohen and Steve Drummond Visual design and development by: LA Johnson

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The Supreme Court takes up student loan forgiveness — What’s at stake?

Subscribe to governance weekly, katharine meyer katharine meyer fellow - governance studies , brown center on education policy.

March 1, 2023

On February 28 th , the Supreme Court heard arguments in two cases about the Biden administration’s proposed student loan forgiveness program — Biden v. Nebraska and U.S. Department of Education v. Brown . The cases focused on two key questions – do the petitioners meet the constitutional requirement for “standing,” or injury, from the policy, and does the Department of Education have the legal authority to forgive student loan debt? Depending on the Court’s decision, millions of Americans will have a substantial share, if not all, of their student loans forgiven.

Who stands to benefit and what are the implications of the Court’s decision?

Who stands to benefit?

The majority of voters supported student loan forgiveness when President Biden announced his plan to forgive up to $10,000 in student loan debt (or $20,000 for those who received a Pell grant). Nonetheless, there has been ongoing debate about who benefits and the economic implications of widespread forgiveness.

Who benefits most depends on how you define benefit — whether as the amount of forgiveness or share of loans forgiven. Some individuals will receive a larger amount of loan forgiveness because they hold larger loan balances. However, framing benefit as the share of loans forgiven means more lower-balance borrowers will become debt-free. Analysis from the U.S. Census finds that about 29% of student loan borrowers would have their full balances forgiven.

Debt balances — and potential forgiveness — vary by the borrower’s race, gender, and educational attainment. Advanced degree graduates are more likely to have loans and higher balances —  graduate school is expensive — but are also on average higher income and less likely to qualify for the policy’s income cap. A smaller share of individuals who never completed college hold loans — but those that do also never received the benefits of a college credential, and between 39%-67% of those borrowers would become debt-free if the policy is enacted. Black borrowers at every level of education are more likely to have student loans for the same education, and the black-white gap in student loan debt more than triples four-years after students earn bachelor’s degrees.

The Legal Questions: Standing

The administration has been playing proverbial “whack-a-mole” with potential standing arguments since they first announced the policy — first clarifying that individuals could opt-out from receiving forgiveness after a potential petitioner claimed injury from a state tax burden on their forgiven loans, and then announcing older, privately held loans were no longer eligible for consolidation to receive forgiveness, amid murmurings of private banks claiming standing on lost account revenue.

Biden v. Nebraska (brought by six states — Nebraska, Missouri, Arkansas, Iowa, Kansas, and South Carolina) offered the most plausible standing argument of the two cases, with the main argument that Missouri could face reduced contributions from the Missouri Higher Education Loan Authority (MOHELA), one of the largest federal student loan servicers. MOHELA is set up as a third-party from the state and has an obligation to contribute to Missouri state university funds, and petitioners argue that if MOHELA has fewer customers due to loan forgiveness, they will be unable to make those obligations (even though they have not made those payments in about 15 years). However, MOHELA has been notably quiet about this argument, except to respond to an inquiry from Rep. Cori Bush (D-Mo.) noting they were not involved in the state’s decision to pursue a lawsuit. Solicitor General Elizabeth Prelogar acknowledged that MOHELA would have standing in a case, and their absence from the suit was highlighted by several justices, including Justice Amy Coney Barrett who has previously rejected challenges to the loan forgiveness program, declining to take up lower court cases based on lack of standing.

A Major Question: Authority

The Department of Justice presented the case for the Secretary of Education having the authority to forgive student loans. Drawing on the Higher Education Relief Opportunities for Students (HEROES) Act of 2003 which has provided justification for the ongoing student loan payment pause, the Department argues they have the authority to forgive student loans. Much of the debate centered around the meaning of the words “waive or modify” and the scope implied by Congress when passing the HEROES Act.

At the heart of the issue is the question of economic impact and whether or not it should factor in legal decisions to waive or modify.

Estimates vary in how much the program will cost, with uncertainty around ultimate take-up of the program. Estimates for the program are high — potentially up to $400 billion over ten years — and the high cost of the program featured heavily in lines of inquiry from Justice Clarence Thomas during Court arguments on Tuesday about whether the Secretary overstepped authority and the policy represented more than a “modification.” Here, though, lines of oral arguments centered on the distinction between a legal question and a policy debate. While the Court may have authority to rule on legal questions of standing and executive interpretation of Congressional acts, other justices argued the economic impact of a policy should not factor in those legal decisions.

Decision Implications

The Court will face an important question of precedent — do they want to establish that the potential loss of state tax revenue or ineligibility to benefit from a policy is sufficient to meet the constitutional standing requirement? Or do they wish to set the precedent that the HEROES Act provides the broad authority for student loan cancelation? The second precedent is less likely to occur again — the HEROES Act is closely tied to national emergencies, and the current one ends on May 11.

Restarting Repayments

Millions of borrowers will face repayment in 2023. While there have been many “final” extensions to the student loan repayment pause, the ending of the national public health emergency on May 11 likely means the current extension will be the last. Student loan payments will resume 60 days following the Supreme Court’s decision (or 60 days following June 30). A key provision of the HEROES Act is that waivers or modification to student loan terms are authorized if they are necessary to ensure individuals “are not placed in a worse position financially” as a result of the national emergency. The Department of Justice argued that this restart of payments is itself a motivating act for loan forgiveness, as the restart of payments after a substantial pause would cause harm to a significant share of borrowers.

The most concerning outcome is that borrowers who are unprepared for their payments to resume may fall into delinquency or default , which can result in wages garnishment and borrowers losing eligibility for additional financial aid. Default is more common among two-year college borrowers and those who attended for-profit institutions. About two out of five borrowers who attended a two-year, for-profit institution defaulted on their loans within five years.

The Biden administration launched their “ Fresh Start ” initiative in April 2022 to move borrowers who were in default prior to the pandemic into good standing — though borrowers must apply for the program. Borrowers could also sign up for an income-based repayment plan if their monthly payments are too high, though take-up rates on those plans are low. The Biden administration has announced plans for a new income-driven repayment plan that would result in substantially more borrowers having $0 monthly payments , but this plan is still in development, and it is unclear if it will be in place when the student loan payment pause ends.

Questions about the legality and impact of the proposed student loan forgiveness program are not easy ones to answer — and we shouldn’t expect the Court to issue a decision until June. Regardless of the decision, college funding and affordability are in dire need of reform. Supporting existing borrowers through reduced balances and repayment plans is a way to redress past damage — now the work must turn to building a sustainable federal and state system of funding higher education that actually improves students’ economic well-being.

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Supreme Court student loan case: The arguments explained

The Supreme Court is about to hear arguments over President Joe Biden’s student debt relief plan, which impacts millions of borrowers who could see their loans wiped away or reduced. (Feb. 27)

FILE - New graduates walk into the High Point Solutions Stadium before the start of the Rutgers University graduation ceremony in Piscataway Township, N.J., on May 13, 2018. The Supreme Court is about to hear arguments over President Joe Biden’s student debt relief plan. It’s a plan that impacts millions of borrowers who could see their loans wiped away or reduced. (AP Photo/Seth Wenig, File)

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FILE- Light illuminates part of the Supreme Court building on Capitol Hill in Washington, Nov. 16, 2022. The Supreme Court is about to hear arguments over President Joe Biden’s student debt relief plan. It’s a plan that impacts millions of borrowers who could see their loans wiped away or reduced. (AP Photo/Patrick Semansky, File)

FILE - President Joe Biden speaks about student loan debt relief at Delaware State University, Friday, Oct. 21, 2022, in Dover, Del. The Supreme Court is about to hear arguments over President Joe Biden’s student debt relief plan. It’s a plan that impacts millions of borrowers who could see their loans wiped away or reduced. (AP Photo/Evan Vucci, File)

FILE - President Joe Biden speaks about the student debt relief portal beta test in the South Court Auditorium on the White House complex in Washington, Oct. 17, 2022. The Supreme Court is about to hear arguments over President Joe Biden’s student debt relief plan. It’s a plan that impacts millions of borrowers who could see their loans wiped away or reduced. (AP Photo/Susan Walsh, File)

FILE - Graduates walk at a Harvard Commencement ceremony held for the classes of 2020 and 2021, May 29, 2022, in Cambridge, Mass. The Supreme Court is about to hear arguments over President Joe Biden’s student debt relief plan. It’s a plan that impacts millions of borrowers who could see their loans wiped away or reduced. (AP Photo/Mary Schwalm, File)

WASHINGTON (AP) — The Supreme Court is about to hear arguments over President Joe Biden’s student debt relief plan, which impacts millions of borrowers who could see their loans wiped away or reduced.

So far, Republican-appointed judges have kept the Democratic president’s plan from going into effect, and it remains to be seen how the court, dominated 6-3 by conservatives, will respond . The justices have scheduled two hours of arguments in the case Tuesday, though it will probably go longer . The public can listen in on the court’s website beginning at 10 a.m. EST.

Where things stand ahead of the hearing as well as what to expect:

HOW DOES THE FORGIVENESS PLAN WORK?

The debt forgiveness plan announced in August would cancel $10,000 in federal student loan debt for those making less than $125,000 or households with less than $250,000 in income per year. Pell Grant recipients, who typically demonstrate more financial need, would get an additional $10,000 in debt forgiven.

College students qualify if their loans were disbursed before July 1. The plan makes 43 million borrowers eligible for some debt forgiveness, with 20 million who could have their debt erased entirely, according to the Biden administration.

The White House says 26 million people have applied for debt relief, and 16 million people had already had their relief approved. The Congressional Budget Office has said the program will cost about $400 billion over the next three decades.

HOW DID THE ISSUE WIND UP AT THE SUPREME COURT?

The Supreme Court is hearing two challenges to the plan. One involves six Republican-led states that sued. The other involves a lawsuit filed by two students.

A lower court dismissed the lawsuit involving the following states: Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina. The court said the states could not challenge the program because they weren’t harmed by it. But a panel of three federal appeals court judges on the U.S. Court of Appeals for the 8th Circuit — all of them appointed by Republican presidents — put the program on hold during an appeal . The Supreme Court then agreed to weigh in .

The students’ case involves Myra Brown, who is ineligible for debt relief because her loans are commercially held, and Alexander Taylor, who is eligible for just $10,000 and not the full $20,000 because he didn’t receive a Pell grant. They say that the Biden administration didn’t go through the proper process in enacting the plan, among other things.

Texas-based U.S. District Judge Mark Pittman, an appointee of President Donald Trump, sided with the students and ruled to block the program. Pittman ruled that the Biden administration did not have clear authorization from Congress to implement the program. A federal appeals court left Pittman’s ruling in place, and the Supreme Court agreed to take up the case along with the states’ challenge.

HOW DID BIDEN GET TO CANCEL THE DEBT?

To cancel student loan debt, the Biden administration relied on the Higher Education Relief Opportunities for Students Act, commonly known as the HEROES Act. Originally enacted after the Sept. 11, 2001, terror attack, the law was initially intended to keep service members from being worse off financially while they fought in wars in Afghanistan and Iraq. Now extended, it allows the secretary of education to waive or modify the terms of federal student loans as necessary in connection with a national emergency.

Trump, a Republican, declared the COVID-19 pandemic a national emergency in March 2020, but Biden recently announced that designation will end May 11 . The Biden administration has said that the end to the national emergency doesn’t change the legal argument for student loan debt cancellation because the pandemic affected millions of student borrowers who might have fallen behind on their loans during the emergency.

WHAT ARE THE JUSTICES LIKELY TO ASK ABOUT?

Expect the justices to be focused on several big issues. The first one is whether the states and the two borrowers have the right to sue over the plan in the first place, a legal concept called “standing.” If they don’t, that clears the way for the Biden administration to go ahead with it. To prove they have standing, the states and borrowers will have to show in part that they’re financially harmed by the plan.

Beyond standing, the justices will also be asking whether the HEROES Act gives the Biden administration the power to enact the plan and how it went about doing so.

WHEN WILL BORROWERS KNOW THE OUTCOME?

It will likely be months before borrowers learn the outcome of the case, but there’s a deadline of sorts. The court generally issues all of its decisions by the end of June before going on a summer break.

Whether or not the debt gets cancelled, the case’s resolution will bring changes. While federal student loan payments are currently paused, that will end 60 days after the case is resolved . And if the case hasn’t been resolved by June 30, payments will start 60 days after that.

Follow the AP’s coverage of the U.S. Supreme Court at https://apnews.com/hub/us-supreme-court .

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Making the Case: Solving the Student Debt Crisis

March 23, 2020  • Financial Security Program , Tim Shaw & Kiese Hansen

For people across the United States, student loan debt is a growing portion of the household balance sheet. More than 40 million Americans have outstanding student loan balances. In 2019, the total amount of student debt owed surpassed $1.5 trillion, now the largest source of non-mortgage debt.

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The problems associated with student loan debt are systemic and consequential for borrowers, their families, their communities, and for the nation’s economy. But these problems are also solvable. This brief outlines goals and solutions for crosssector action from federal, state, and local policymakers, employers, and other stakeholders to address rising student debt burdens, which have grown six-fold in the last 15 years. The brief explains the student debt crisis as it exists today, how it affects household financial security, and who is most impacted. Government officials, researchers, policymakers, private and nonprofit organizations, as well as the public, can use this brief for building momentum and driving action to solve this evolving crisis.

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Education loan repayment: a systematic literature review

• Original Article
• Open access
• Published: 05 October 2023

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• Rakshith Bhandary   ORCID: orcid.org/0000-0001-7994-0430 1 ,
• Sandeep S. Shenoy   ORCID: orcid.org/0000-0002-9848-9718 1 ,
• Ankitha Shetty   ORCID: orcid.org/0000-0002-1314-7322 1 &
• Adithya D. Shetty   ORCID: orcid.org/0000-0003-3062-2655 1  

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Education is a significant contributor to human capital. Financial assistance for education through institutional loan serves as the key element for human development, and loan repayment without default makes the education loan product self-sustainable. The systematic review aims to study the various articles related to education loan repayment (ELR) using bibliometric analysis approach and R studio software with the help of biblioshiny package. The study analyses 812 articles published in the Scopus database between 1990 and 2022. The review identifies most relevant authors, most cited articles, publication trends, keywords and themes, and trending topics. The review finds that research in the domain of ELR is at an increasing trend with a growth rate of 7.2% and, in the year 2022, the highest number of scientific publications, that is, 72 articles, was published. The review exhibits that existing research in the field has mainly focused on themes such as repayment burden, financial literacy, financial education, student debt, income, mental health, and loan defaults. The study concludes that highly cited work in educational loan repayment is in the field of medicine, highlighting salary as the key factor for educational loan repayment, and loan repayment is incentivized by the federal government to serve the designated underserved areas through service option loan repayment programs. Methods on designing and marketing new approaches to loan repayment can be researched in future with relation to human resource recruitment and retention by the employers.

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Introduction

Education loans (ELs) are an important source of financing for higher education. However, the increasing number of students’ relying on educational loans has emphasized the challenges associated with loan repayment. The concept of promoting ELs in India was first introduced in 2001 by the Indian Banks Association (IBA), which also designed the educational loan scheme. There are 864 universities, 40,026 schools, and 11,669 independent higher education institutions in India. 77.8 percentage of India's colleges are privately run, and majority are non-assisted colleges. In Indian higher education, the gross enrolment ratio (GER) is 25.2 percentage for 2016–2017, while globally, it ranges from 8 percentage in Africa to 75 percentage in Europe and North America (Nerkar and Dhongde 2018 ). Overall enrolment in Indian higher education is 1.9 crore boys and 1.6 crore girls as of 2018. The overall portfolio of ELs is about Rs. 80,000 crore, consisting mainly of scheduled commercial banks (contributing Rs. 73,000 crore), cooperative banks (Rs. 2000 crore), and non-banking financial corporations (Rs. 5000 crore) as mentioned by Nerkar and Dhongde ( 2018 ).

ELs sanctioned in India have declined by 25% over the past 5 years from 2015 to 2019 because default ratios have increased in education loan repayment (ELR). As on March 31, 2019, the sanctioned number of loans for education decreased from 3.34 to 2.5 lakh (Chitra 2019 ). The reason for the decline in ELs sanctioned is due to the increasing non-performing assets in the education loan (EL) portfolio of financial institutions. However, it may be noted that the total loan amount disbursed has increased by 34 per cent amounting to Rs. 22,550 crore in the fiscal year 2019 from Rs. 16,800 crore in the financial year 2015 (Chitra 2019 ), which indicates that banks are keen on funding high ticket education loans. Student loan borrowing is at its highest ever as of August 2022, with more than 45 million borrowers collectively owing $1.75 trillion student loan debt including private and federal loans in the USA, and the average borrowing per student is around $28,950. Federal student loan repayments have been paused, it is in forbearance from March 2020 owing to the COVID-19 Pandemic, and the repayment reprieve was set to expire in May 2022 (Hahn 2023 ).

The motive to review the study on factors affecting ELR is based on the value parameters for literature reviews written by Lim et al. ( 2022a ) that highlights necessity, importance, relevance, urgency, and contribution of literature reviews. This review gives insights to future researchers to identify gaps, avoid duplicative efforts in ELR by identifying the current state and progress in ELR. This study explains the benefits to new and established scholars with an updated understanding of the field of study, and the emerging fields in ELR, and its relevance to the journals scope. There are limited reviews on ELR, and past studies have limitations since they do not address the issues caused by covid-19 pandemic.

Mukherjee et al. ( 2022 ) mentioned theoretical contributions from science mapping and practical contributions from performance analysis for bibliometric analysis. In this study, theoretical contributions are presented by clarifying nomological networks to ELR factors, mapping social patterns to understand the social process supporting knowledge development in the field, and by tracking the declining, growing, and emerging topics. It also recognizes crucial knowledge gaps for future directions. Practical contributions of this study include reporting research productivity and impact in ELR, ascertaining reach for coverage claims, identifying social dominance or hidden biases, detecting anomalies for further examination, and evaluating relative performance. The aim of the paper is to systematically review the various articles related to ELR and the factors affecting repayment.

Literature review

Studies have found that ELs are widely available and offered by various financial institutions such as banks, non-banking financial companies, and educational institutions (Rani 2016 ). The factors affecting ELRs include interest rate, type of loan—mortgage-based or income contingent, loan amount, repayment period, and financial conditions of the borrower (Ganapathy et al. 2019 ). Moreover, the attitude of the borrower was found to influence ELR (Bhandary et al. 2023 ; Ismail et al. 2011 ). Several studies have identified the major challenges faced by borrowers in repaying their ELs. These challenges include high interest rates (Miller et al. 2019 ), low repayment capacities (Ganapathy et al. 2019 ), low levels of awareness (Ganapathy et al. 2019 ), lack of job opportunities (Dutta and Dey 2019 ), and the lack of effective loan management systems (Rani 2016 ). Borrowers with limited financial resources are often unable to repay their loans due to high interest rates, which can make it difficult for them to manage their finances (Chaudhary and Kaur 2018 ). In addition, lack of job opportunities makes it difficult for borrowers to repay their loans as they may not have a steady income (Dutta and Dey 2019 ).

EL programs vary across different countries in the world in terms of organizational structure, underlying objective, initial funding sources, loan application procedures, student coverage, and the collection methods (Ziderman 2004 ). Government-subsidized EL schemes are available in 70 countries across the world (Shen and Ziderman 2009 ). Prior research has suggested many factors in the background of educational loans, concerning non-repayment by borrowers. Such considerations include history of borrowers, amount of loan borrowed, instability of employment and wages, form of repayment, academic experience, institutional characteristics, income, and education of parents (Lochner et al. 2013 ). The same study mentioned financial instability as the biggest barrier to loan repayment. Rani ( 2016 ) suggested that scholarships, fees, grants, and ELs need to be re-evaluated in the context of increasing costs to design better schemes for higher education.

This study has implications for bank marketing for recouping the money spent on EL. Prospective authors can examine consumer behaviour towards banks and financial service providers as per the gap analysed by Kumar et al. ( 2022b ), and ways forward on personal financial management is encouraged given the impact of covid-19 pandemic on consumer finances. In the study by Baker et al. ( 2023 ), financial fragility is negatively associated with financial well-being, and loan repayment has implications on financial well-being of young adults. In the study by Tavares et al. ( 2023 ), individuals presented greater levels of financial literacy perception compared to actual knowledge of financial literacy. She et al. ( 2023 ) mentioned the lack of research articles in interventions to improve young adults’ financial well-being and found limited consensus on a conclusive measure for young adults’ financial well-being. Contributions of this study have implications on young adults’ financial well-being, safeguarding the financial well-being of young adults’ in areas such as financial fragility and financial literacy. The systematic review aims to evaluate and synthesize the existing research on EL programs in various countries around the world, with a focus on the current state of ELR, challenges faced by borrowers, and measures taken to overcome these challenges. Hence, we frame the following research questions.

What is the publication trend in ELR research?

Which are the most influential articles contributing to ELR research?

Who are the top prolific authors in ELR research?

What are the major themes and topics studied in ELR research?

What is the future scope of research in ELR research?

This systematic review uses bibliometric analysis using biblioshiny package in R Language to understand the trends in publication and to uncover the future research directions. Biblioshiny is a data visualization tool developed in R language by Aria and Cuccurullo ( 2017 ) to perform bibliometric analysis. The study follows the method of evidence informed management knowledge for systematic review (Tranfield et al. 2003 ). Eligibility and screening evaluation observed PICO (Participants, Interventions, Comparisons and Outcomes), and PRISMA (Preferred Reporting Items for Systematic Reviews and Meta Analysis) guidelines. The data collection stage encompassed selecting the database, extracting literature with inclusion- exclusion criteria, exporting the extracted data to biblioshiny, and filtering the articles. The data search was conducted on the Scopus database because of its large coverage as compared to web of science (Mongeon and Paul-Hus 2016 ).

The fundamental elements of literature reviews as independent studies are adopted from the guidelines prepared by Kraus et al. ( 2022 ) for systematic literature reviews. The interrogative approach of “what” “why” “when” “where” “who” and “how” prescribed by Paul et al. ( 2021 ) in Scientific Procedures and Rationales for Systematic Literature Reviews (SPAR-4-SLR) is used as a tool guide in this study. The bibliometric data were analysed using the three stage sensemaking approach of scanning the data, sensing the data and substantiating the findings developed by Lim and Kumar ( 2023 ).

The search string combinations and Boolean operators used are TITLE-ABSTRACT-KEYWORD ("education*" OR "student*" AND "loan*" OR "debt*" AND "payment*" OR "repayment*" OR "instalment*") AND PUBLICATION YEAR > 1989 AND PUBLICATION YEAR < 2023 AND (LIMIT-TO (PUBLICATION STAGE, "final")) AND (LIMIT-TO (DOCUMENT TYPE, "article") OR LIMIT-TO (DOCUMENT TYPE, "book chapter") OR LIMIT-TO (DOCUMENT TYPE, "review") OR LIMIT-TO (DOCUMENT TYPE, "conference paper") OR LIMIT-TO (DOCUMENT TYPE, "book")) AND (LIMIT-TO (LANGUAGE, "english")). Finally, 812 articles were extracted from Scopus in csv format and exported to biblioshiny for analysis. Articles, book chapters, reviews, conference papers, and books were included after excluding editorial letters, notes, and short surveys from the data in biblioshiny as shown in Fig.  1 . The inclusion exclusion criteria followed the PRISMA protocol introduced by Moher et al. ( 2009 ) and 38 records were included for the bibliometric study.

Review process for ELR research based on the PRISMA protocol

The study applied bibliometric analysis to provide an overview of the research in the field of ELR. Bibliometric analysis toolbox by Donthu et al. ( 2021 ) prescribes performance analysis and science mapping for bibliometric result analysis. Performance analysis techniques used in this study are descriptive analysis and citation analysis. The science mapping method included in our study is keyword co-occurrence analysis. The study results have been discussed in the below sections.

Annual scientific production

Figure  2 illustrates the research and publication trend from 1990 to 2022. The figure depicts rapid growth in the publication since 2009 and the compounded annual growth rate is 7.2%. From 1990 to 2006, there was a slow-paced growth in the research field. After 2009, there was a surge in publications demonstrating the growing interest among research scholars. The total number of publications ( n ) from 1990 to 2022 yielded 812 documents; 93.58% were published between 2009 and 2022. The year 2022 has the highest number of publications ( n  = 72). The statistics of annual scientific production show that ELR has emerged as a significant research theme.

Most relevant authors and authors’ impact

Figure  3 shows the most relevant authors. Chapman has published the highest number of documents (15 articles). The second highest work in ELR is done by Pathman, with 13 articles. Table 1 displays the top 20 most relevant authors, author impact, and total citations received. Ley has been cited more than 300 times. Chapman has the highest h -index of 9.

Most relevant authors

Citation analysis

The top 10 globally cited documents are given in Table 2 . The article by Ley and Rosenberg ( 2005 ) found that physician scientists play a crucial role in medical research and were declining in number with increased indebtedness of medical graduates due to rising tuition fees. The study highlights ELR as an obstacle to pursue medical research careers. Rosenblatt et al. ( 2006 ) found that the major barrier in physician recruitment to community health centres was low salaries and recruitment was heavily dependent on NHSC scholarships and state loan repayment programs. Loan repayment for community service in the designated shortage areas was used as an incentive to entice physicians to work in the underserved areas (Pathman et al. 2004 ). Medical residents reported symptoms of stress, depression, increased cynicism, and decreased humanism owing to their association with increased EL debt and sought for legislative relief from early loan repayment (Collier et al. 2002 ). State ELR programs for health workers return of service in underserved areas with minimum service requirements were found to alleviate health worker shortage in underserved areas (Barnighausen and Bloom 2009 ). Skillman et al. ( 2010 ) suggested loan repayment programs to be provided for increased participation in oral healthcare in rural America.

Education debt below $10,000 was found to support college completion and above $10,000 was found to reduce the likelihood of college completion (Dwyer et al. 2012 ) which indicates that amount of loan is a significant factor affecting ELR. In the study by Brown et al. ( 2016 ), it was found that mathematics and financial education among students improves loan repayment behaviour. Walsemann et al. ( 2015 ) studied the mental health of indebted young adults with student loan borrowings and found that the presence of student loans was associated with poor psychological functioning having possible spill over effects like occupational trajectories affecting loan repayment at a later stage. O'Neill et al. ( 2005 ) found that participation in credit counselling programs improves health and financial behaviours.

Word cloud analysis

Figure  4 displays the word cloud analysis, keywords such as higher education, student debt, financial literacy, financial education, human capital, financial aid, loan forgiveness, indebtedness, student loan default, and repayment burdens. Researchers can use these words to find the most relevant articles in ELR.

Co-occurrence network

The co-occurrence network shows the major themes related to student loans. In total, the co-occurrence analysis of keywords revealed six knowledge clusters. The explanation for each cluster is based on sensemaking. Sensemaking is a process of arranging keywords in clusters to convey a coherent narrative (Lim et al 2022b ; Kumar et al 2022a ). The six knowledge clusters are identified under.

Repayment burdens following higher education financing through student loans

The co-occurrence of keywords in cluster one investigates “repayment burdens” and “loan defaults” in “student loans” following “higher education financing”. The “policy” support and “financial aid” are also grouped together since they contribute towards “human capital”.

Loan repayment in pursuit of higher education

The “indebtedness” towards “student debt” and “loan repayment” in pursuit of “higher education” is grouped in cluster two.

Financial literacy through financial education

The third cluster examines “financial literacy” through “financial education” and its relation to “student loan debt”.

National health service corps healthcare support programs in service repayment options

The fourth cluster investigates “national health service corps” incentives, aid to “medical education” and “workforce” to contribute towards “rural health” and “primary care”.

Student debts and income

The sixth cluster examines the relation between “students” and various “debt” of students including “consumer credit” and the different sources of “income” while studying the course.

Student financial aid for educational finance

The sixth cluster examines the various “student financial aid” available to “finance education”.

The links between various clusters are highlighted to show the different areas of study and the interlink between them in Fig.  5 .

Thematic map

Co-word analysis of author keywords identifies trending topics in the field. The thematic map was analysed using the technique mentioned by Cobo et al. ( 2011 ). The trending topics in student loans are identified based on the central-density diagram. Figure  6 shows the four quadrants as per the clusters of keywords based on centrality and density along the X - and Y -axis that are discussed below.

Thematic map (co-word analysis)

Motor theme: The themes of the first quadrant are well-advanced with high centrality and density. There are few motor themes such as “national health service corps”, “workforce”, “loan repayment”, “education debt” and “career”.

Niche themes: Second quadrant themes are with high density and low centrality. They are well-developed and specialized themes but are minimal compared to the overall field. “Mental health” and “housing affordability” are the noted themes in this quadrant.

Peripheral themes: The third quadrant consists declining themes with low density and low centrality. This quadrant includes declining themes such as “financial inclusion”, “student financial aid” and “educational finance”.

Basic themes: These themes under the fourth quadrant have high centrality and low density. They include “student loan”, “higher education” and “student debt”.

Discussions and implications

Key implications are discussed based on the identified cluster of themes and the trending topics.

Scholarships and loan repayment programs by the federal government were mentioned as a prominent factor among medical professionals affecting the ELR program (Ley and Rosenberg 2005 ; Rosenblatt et al. 2006 ). Citation analysis in educational loan repayment in the field of medicine highlighted “salary” as the key factor for ELR, and repayment had to be incentivized by the federal government to serve in the designated underserved areas by service option loan repayment programs (Barnighausen and Bloom 2009 ; Collier et al. 2002 ; Ley and Rosenberg 2005 ; Pathman et al. 2004 ; Rosenblatt et al. 2006 ; Skillman et al. 2010 ). Several states offered financial incentives and ELR programs for healthcare education (Pathman et al. 2013 ).

National Health Service Corps (NHSC) offers student loan repayment programs for physician assistants and nurse practitioners in exchange for 2 years of service with an option to renew the contract after 2 years (Pathman et al. 2014 ). The loan repayment programs (LRP) of the National Health Service Corps (NHSC) have provided critical recruitment and retention incentives (Pathman et al. 2022 ), and the NHSC LRP experience by clinicians in all domains was generally positive (Pathman et al. 2019 ).

Brown et al. ( 2016 ) found that financial and mathematical education improves repayment behaviour of students. It can be inferred that financial education is a factor affecting ELR. Bhatia and Singh ( 2023 ) reported that acquiring financial knowledge and developing positive financial attitude and adopting healthy financial behaviour are important to attain financial well-being. Anand and Mishra ( 2022 ) constructed a nonlinear model using vector machine classifier that classifies potential customers into good and bad class, based on their positive and negative savings behaviour, and concluded that behavioural characteristics along with income level and financial literacy can be used to understand financial distress among millennials. Steep instalment plans which have higher initial repayments as compared to flat instalment plans increase the borrowers focus on making repayments as per the study by Dezső et al. ( 2022 ) which implies instalment plan as a factor affecting ELR.

Mental health of young adults was affected by student loan borrowing having possible spillover effects that affect loan repayment (Walsemann et al. 2015 ). Income contingent loan reforms were suggested by Chapman ( 2006 ) as a much-needed reform in higher education financing. He studied the various income contingent loan repayment schemes in Yale, Sweden, Australia, Sweden, New Zealand and The Republic of South Korea and found that income contingent scheme is a factor that positively supports ELR as compared to mortgage-based loan repayment programs. Borrowing is considered less risky and reduces the impact of loan aversion by participants in the income contingent loan repayment method when compared to mortgage style repayments (Boatman et al. 2022 ). Income contingent repayment methods reduce the financial hardships of borrowers as compared to mortgage-based repayment systems (Barr et al. 2019 ; Cai et al. 2019 ; Chapman and Dearden 2017 ). Simulated EL scheme models for Brazil (Dearden and Nascimento 2019 ) and Ireland (Chapman and Doris 2019 ) favoured income contingent schemes as compared to mortgage-based schemes by reducing the repayment burden on borrowers.

Perception of service quality in banks improves by enhancing customer satisfaction and customer engagement (Ananda et al. 2022 ), which implies that EL borrowers’ engagement with bankers, and increase in borrowers’ satisfaction level with EL service providers improves borrowers’ perception of banks service quality. The study by Zwier ( 2021 ) suggests practitioners to add insurance-based marketing in their products marketing mix to create value added products. On similar lines, insurance-based marketing can be applied to add value in marketing ELs. Educational courses contribute significantly in providing financial resources to the universities as compared to conferences, seminars, consultancy and scientific research (AL-Ghaswyneh 2020 ). The study suggests universities to give more attention to educational courses in their university plans and policies to increase the financial resources implying universities to market ELs along with other stakeholders to increase the universities financial resources.

In the article by Dwyer et al. ( 2012 ), the quantum of loan was a significant factor affecting ELR. The article mentioned the threshold loan amount in the USA as $10,000, above which, loan repayment was likely to be defaulted by non-completion of the course. Banks should strengthen their human capital efficiency and structure capital efficiency should be taken into consideration to strengthen their competitive advantage and gain higher market share (Van Nguyen and Lu 2023 ). In the same study, it was found that intellectual capital fosters the competitive nature of banks and ensures growth and development of banks. EL schemes for developing human capital with service repayment options by banks have to be designed and marketed for students with high intellectual capabilities willing to serve the banks in order to strengthen the banking industry. EL products can be tailor made with partial or full repayment waivers and used as a recruitment tool by banks for students identified with proven intellectual capabilities and commitment to serve the banking sector for a certain duration.

Contributions of our study also have implications on young adults’ financial well-being and safeguarding the financial well-being of young adults’ including areas such as financial fragility and financial literacy.

Ways forward

The contribution of NHSC towards healthcare in underserved areas can be studied further to quantify the healthcare development of underserved areas. The threshold amount of the loan, above which, the repayment is likely to be defaulted, can be studied in developed, developing and under developed countries. Mental health of young adults with student loan borrowing can be researched further in different fields of study other than medicine. Cost–benefit analysis on borrowers who availed mortgage-based repayment, with borrowers who availed income contingent repayment can be researched. Safeguarding the financial well-being of young adults can be studied to explore the relationship of financial literacy and financial fragility with the well-being of student loan borrowers.

Future research can focus on designing new approaches to loan repayment that can be used as a tool for human resource recruitment and retention by the employers, with employers paying a part or full amount of the loan based on the tenure of service. Further research is needed to find innovative design and implementation techniques in mortgage-based and income contingent payment methods.

Conclusions

Key takeaways.

This review aimed at studying the factors affecting ELR by systematically reviewing articles and using technology powered solutions to visualize the output with the help of R studio. This study provides an overview of the current state of ELR and the challenges faced by borrowers in repaying their loans. The review highlights the measures taken to overcome these challenges, such as implementing effective loan management systems, increasing awareness about the loan repayment process, and providing job opportunities to borrowers. ELR in the field of medicine highlights salary as the key factor for educational loan repayment and repayment must be incentivized by the government to work in the designated underserved areas by service option loan repayment programs. EL needs to be marketed by universities to increase their financial resources. EL can be custom designed based on identified intellectual capabilities of borrowers and marketed by banks to increase the human capital and recruit the intellectuals with service repayment options by employers to strengthen the banking industry. Insurance can be coupled and marketed with EL as a value-added product for the beneficiaries. In sum, this technology-enabled systematic literature review using R studio on ELR from articles indexed in Scopus database has delivered on its research objectives and its specific research questions pertaining to the performance analysis and science mapping of the field.

Limitations and future review directions

This review has the following limitations. The bibliometric data are retrieved from a single database, that is, Scopus. Though the usage of Scopus is justified as per prior studies (Donthu et al. 2021 ; Lim et al. 2022b ), the study cannot completely discount the possibility of uncovering new insights on ELR documents indexed in other databases like web of science. Thus, future review can focus on ELR articles using web of science as a cross-check mechanism to either support or contradict the generalizability of the findings in this review.

This study uses bibliometric analysis techniques such as performance analysis and science mapping. Though this review accomplishes the listed objectives, it is important to note that other types of reviews can still be conducted. In this regard, future research can consider analysing using new science mapping methods and performance analysis techniques. This study uses R studio for Bibliometric analysis. The bibliometric studies in future research can focus on using other data visualization software applications such as VOSviewer and Gephi by combining bibliometric analysis with network visualization software (Donthu et al. 2021 ).

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Highlights of the Student Loan Forgiveness Opinions and Dissent

The court’s Republican-appointed conservative majority ruled over the vigorous dissent of its three Democratic-appointed liberal justices. Here are some key excerpts.

By Charlie Savage

Reporting from Washington

• June 30, 2023

The Supreme Court on Friday struck down the Biden administration’s massive student loan forgiveness program, ruling that the Education Department had exceeded the authority granted to it by Congress to alter loan conditions in a national emergency like the coronavirus pandemic.

The ruling was six to three, with the court’s Republican-appointed conservative majority delivering a major setback to President Biden’s policy agenda over the vigorous dissent of its three Democratic-appointed liberal justices. Here are some key excerpts.

A central part of the dispute was how expansively to interpret a provision of the Higher Education Relief Opportunities for Students Act of 2003, or HEROES Act, in which Congress said that the secretary of education “may waive or modify” any provision of federal student loan programs in a declared national emergency. In the majority opinion, Chief Justice John G. Roberts Jr. wrote that the Biden administration had stretched the words too far.

Chief Justice John G. Roberts Jr.

The authority to “modify” statutes and regulations allows the Secretary to make modest adjustments and additions to existing provisions, not transform them . … We hold today that the Act allows the Secretary to “waive or modify” existing statutory or regulatory provisions applicable to financial assistance programs under the Education Act, not to rewrite that statute from the ground up.

In the dissenting opinion, Justice Elena Kagan rejected Chief Justice Roberts’s interpretation of the text of the law. She accused the majority of abandoning the usual conservative ideology of textualism, or interpreting statutes in ways that hew to the words themselves.

Justice Elena Kagan

For years, this Court has insisted that the way to keep judges’ policy views and preferences out of judicial decisionmaking is to hew to a statute’s text. The HEROES Act’s text settles the legality of the Secretary’s loan forgiveness plan. The statute provides the Secretary with broad authority to give emergency relief to student-loan borrowers, including by altering usual discharge rules. What the Secretary did fits comfortably within that delegation. But the Court forbids him to proceed.

Chief Justice Roberts supplemented the majority’s interpretation of the words “waive or modify” by invoking the so-called major questions doctrine, a creation of conservative justices that says courts should strike down regulations and other agency actions that raise “major questions” if Congress was not explicit enough in authorizing them. (The court expanded and entrenched that doctrine in a case last year striking down an Environmental Protection Agency plan to curb carbon emissions from power plants.)

In a concurring opinion, Justice Amy Coney Barrett fleshed out the doctrine and argued that it applied to the student loan case.

Justice Amy Coney Barrett

It is obviously true that the Secretary’s loan cancellation program has “vast ‘economic and political significance.’” Utility Air, 573 U. S., at 324. That matters not because agencies are incapable of making highly consequential decisions, but rather because an initiative of this scope, cost, and political salience is not the type that Congress lightly delegates to an agency. And for the reasons given by the Court, the HEROES Act provides no indication that Congress empowered the Secretary to do anything of the sort.

Justice Kagan’s dissent was scathing about that move as well.

The opinion ends by applying the Court’s made-up major-questions doctrine to jettison the Secretary’s loan forgiveness plan. Small wonder the majority invokes the doctrine. The majority’s “normal” statutory interpretation cannot sustain its decision. The statute, read as written, gives the Secretary broad authority to relieve a national emergency’s effect on borrowers’ ability to repay their student loans. The Secretary did no more than use that lawfully delegated authority. So the majority applies a rule specially crafted to kill significant regulatory action, by requiring Congress to delegate not just clearly but also microspecifically.

The case also involved a technical dispute: whether the plaintiffs had legal standing to challenge the Biden administration’s program. (The court dismissed a parallel case on Friday brought by two student loan borrowers, ruling that the injury they claimed to have suffered was not sufficiently linked to the forgiveness program to give them standing.)

Several Republican-controlled states filed the lawsuit, and the most important turned out to be Missouri, which has created a nonprofit government corporation called MOHELA that participates in the student loan market and collects fees.

While MOHELA itself did not file the lawsuit, and its fees do not go into state coffers, Chief Justice Roberts wrote that the impact of the student loan forgiveness program on the agency created a sufficient injury to Missouri to give the state itself standing to sue.

Chief Justice Roberts

By law and function, MOHELA is an instrumentality of Missouri: It was created by the State to further a public purpose, is governed by state officials and state appointees, reports to the State, and may be dissolved by the State. The Secretary’s plan will cut MOHELA’s revenues, impairing its efforts to aid Missouri college students. This acknowledged harm to MOHELA in the performance of its public function is necessarily a direct injury to Missouri itself.

Justice Kagan accused the majority of engaging in legal contortions because they wanted to give themselves an opportunity to strike down a program they did not like.

The majority’s opinion begins by distorting standing doctrine to create a case fit for judicial resolution. But there is no such case here, by any ordinary measure. The Secretary’s plan has not injured the plaintiff-States, however much they oppose it. And in that respect, Missouri is no different from any of the others. Missouri does not suffer any harm from a revenue loss to MOHELA, because the two entities are legally and financially independent. And MOHELA has chosen not to sue—which of course it could have. So no proper party is before the Court. A court acting like a court would have said as much and stopped.

Chief Justice Roberts put an addendum on his majority opinion telling the public not to interpret Justice Kagan’s dissent as a sign of discord at the Supreme Court.

It has become a disturbing feature of some recent opinions to criticize the decisions with which they disagree as going beyond the proper role of the judiciary. … We have employed the traditional tools of judicial decisionmaking in doing so. Reasonable minds may disagree with our analysis—in fact, at least three do. … We do not mistake this plainly heartfelt disagreement for disparagement. It is important that the public not be misled either. Any such misperception would be harmful to this institution and our country.

Charlie Savage is a Washington-based national security and legal policy correspondent. A recipient of the Pulitzer Prize, he previously worked at The Boston Globe and The Miami Herald. His most recent book is “Power Wars: The Relentless Rise of Presidential Authority and Secrecy.” More about Charlie Savage

Investing in the future: Simplifying financial aid

Department of Education transforms customer experience for over 40 million borrowers.

5-minute read

Call for change

Higher education opens up a world of opportunities. For millions of aspiring students, financial aid is essential to unlocking that door…and the Department of Education holds the key.

The Department provides more than $120 billion annually through its Title IV programs, making post-secondary education accessible to millions of students. To best support the aspirations of these students—many of whom are the first in their family to attend college or vocational school—the Department set an ambitious goal of its own: a dramatic reimagining of the Federal Student Aid (FSA) agency’s customer experience.

As a federally-funded program, FSA must meet the individualized needs of all eligible borrowers, while complying with a complex system of congressionally-mandated rules and regulations. The process can be equally complex for students and their families. In the past, borrowers faced inconsistent information across various platforms and channels—web and mobile, landline phone, email, U.S. mail, text and social media.

With more than 40 million borrowers currently owing nearly $1.6 trillion, second only to mortgage debt in the U.S., the Department needed an intuitive and user-friendly solution that would make it easy for students to access information, make informed borrowing decisions and manage their loans. The solution would also need to increase efficiency and agility in responding to customers’ needs and addressing legislative changes.

To meet these diverse challenges, the Department envisioned a truly modernized, personalized digital experience—powered by cloud and emerging technologies—on par with what consumers expect from banks and other financial institutions.

When tech meets human ingenuity

The Department teamed up with Accenture Federal Services to tackle this transformation, embracing the bold vision of a Next Generation Financial Services Environment (NextGen)—an innovative, streamlined, world-class solution that would benefit students, parents, school financial aid administrators, and other customers and partners.

To bring this vision to life, the team incorporated human-centered design techniques, consulting with financial aid administrators and industry experts and conducting hundreds of interviews and workshops with parents, students and customer service representatives. Their insights informed the development of a seamless, inclusive solution where borrowers can learn about, apply for and manage their federal financial aid.

As part of the NextGen transformation, the new Digital and Customer Care (DCC) program consolidated and integrated previously disconnected websites, customer care solutions and communications platforms. Using cloud technologies with robust capabilities, such as Amazon Web Services and Salesforce, the team delivered a sophisticated, scalable and secure platform that gives FSA the agility necessary to support its innovation agenda.

The new, omni-channel network includes:

• A single digital platform:  Integrates 13 legacy websites and serves as a borrower’s front door to services via the StudentAid.gov website and mobile app.
• A modern marketing platform:  Delivers real-time, personalized email and SMS communications and expanded targeted marketing across social and paid media.
• A consolidated care platform: Empowers customer service agents and back-office processers to better manage customer inquiries.
• Aidan® virtual assistant: Uses natural language understanding to answer frequently asked questions and provides key transactional functions 24/7.

Together, these innovations deliver a unified customer care experience across the full financial aid life cycle, streamlining account activity and enabling consistent messaging across platforms: giving borrowers what they want, when and where they want it.

The new platform also provides flexibility and efficiency and enables the Department’s workforce to adapt quickly and respond to unexpected disruptions like COVID-19 with consistent, comprehensive communications about essential developments.

A valuable difference

Higher education has the potential to be world-changing on the individual level and to decrease inequities on the societal level. The Department was determined to ensure that an applicant’s financial circumstances are not a barrier to higher education and students are not disadvantaged by a disjointed process. The Department’s commitment to transforming the customer experience is already paying off.

The new program represents a huge step forward for FSA, which successfully delivered a significant digital transformation at scale in a short amount of time. Borrowers can call customer service and be immediately connected to an agent with access to all relevant information. They can get immediate support from a virtual assistant wherever and whenever they wish. They can visit a single website or use a feature-rich mobile app. They can receive personalized updates via email or text. And in all these instances, they can expect a reliable, productive, and consistent experience.

In the first 12 months after deployment, FSA achieved the following results:

Visits to StudentAid.gov

Inbound calls to the single toll-free number transferred to contact centers

Contact centers fully mobilized with more than 1,200 agents able to handle inquiries

Emails sent to customers using the marketing platform

Messages handled by Aidan®

These innovations work hand-in-hand to instill trust from the start, which is essential in establishing a relationship that will endure for many years. The platform prepares students for the reality of repayment by offering end-to-end financial literacy counseling. It also simplifies some of the most challenging aspects of the process through interactive tools such as a Public Service Loan Forgiveness online help tool and a Loan Simulator, which Megan Coval, vice president of policy and federal regulations for the National Association of Student Financial Aid Administrators, called “a victory for students.”

Whether it’s helping someone be the first in the family to go to college or helping a borrower get back on his or her feet, the Department of Education’s new customer-centric approach is delivering on its mission to make the dream of higher education a reality and invest in America’s greatest asset—its people.

FSA now has the technology and tools to continually improve the experience and expand its services to support students and families in the future.

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The Account Is in Default

What you can do, worst-case scenario, the bottom line.

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What Happens If You Don’t Pay Your Student Loans?

Student loan debt is one of the most significant issues impacting Americans' lives today. As of 2023 Q1, the Federal Reserve Bank of St. Louis reported outstanding student loan debt in the United States exceeded $1.77 trillion.

Please don't ignore your debt since this can have serious consequences . In most respects, defaulting on a student loan carries the same consequences as failing to pay off a credit card. However, it can be much worse in since the government can take action to get what's owed. The federal government guarantees most student loans and can act as a debt collector.

Please note: President Biden implemented an income-driven repayment (IDR) plan on June 30, 2023, called the Saving on a Valuable Education (SAVE) . It offers enhanced financial benefits to student loan borrowers. Three important features launched in the summer of 2023, with full regulations to take effect in July 2024.

However, on July 18, 2024, a federal court blocked the Saving on a Valuable Education (SAVE) Plan from operating until the resolution of pending legal cases. In the meantime, SAVE plan borrowers have been placed in forbearance, meaning no payments need to be made, and interest will not accrue.

Key Takeaways

• You may be able to use federal student loan assistance programs to help you repay your debt before it goes into default.
• Let your lender know that you may have problems repaying your student loan.
• Failing to pay your student loan within 90 days classifies the debt as delinquent, which means your credit rating will take a hit.
• After 270 days, the student loan is in default and may then be transferred to a collection agency.
• Keeping up with your student loan payments helps improve your credit score.

First, You’re Considered Delinquent

When your loan payment is 90 days overdue, it is officially delinquent , which gets reported to all three major credit bureaus. As a result, your credit score can take a hit.

That means new credit applications may get denied, or you may receive a higher interest rate associated with risky borrowers if approved for credit. A bad credit score can follow you in other ways. Potential employers often check the credit score of applicants and can use them as a measure of your character.

Cell phone service providers also check credit ratings. They may deny you the service contract you want. Utility companies may demand a security deposit from customers they don’t consider creditworthy . A prospective landlord might reject your application.

When your payment is 270 days late, it is officially in default. The financial institution to which you owe the money refers your account to a collection agency. The agency will do its best to make you pay, short of actions that are prohibited by the Fair Debt Collection Practices Act (FDCPA) . Debt collectors also may tack on fees to cover the cost of collecting the money.

It may be years down the road before the federal government gets involved, but when it does, its powers are considerable. It can seize your tax refund and apply it to your outstanding debt. It can garnish your paycheck, meaning it will contact your employer and arrange for a portion of your salary to be sent directly to the government.

These dire consequences can be avoided, but you must act before your loan defaults . Several federal programs are designed to help, and they are open to all who have federal student loans, such as Stafford or Grad PLUS loans, although not to parents who borrowed for their children.

Debt Forgiveness

Three similar programs, called Income-Based Repayment (IBR), Pay As You Earn (PAYE) , and Saving on a Valuable Education (SAVE), reduce loan payments to an affordable level based on the applicant’s income and family size. The government may even contribute part of the interest on the loan and will forgive any remaining debt after you make your payments over a period of years.

The balance is indeed forgiven, but only after 20 to 25 years of payments. The payments may be reduced to zero, but only while the indebted person has a very low income.

The Biden administration had planned on canceling up to $20,000 of federal student debt per borrower. However, the Supreme Court ruled on June 30, 2023, that the Biden administration lacked the authority to cancel the debt.

The Supreme Court's decision put an end to the student loan forgiveness that President Biden originally announced back in Aug. 2022, which had been in legal limbo since Nov. 11, 2022.

The three-year forbearance on student loan payments and interest that began back in 2020 ended this year. Student loans began accruing interest on Sept. 1, while required payments restarted in October.

Saving on a Valuable Education (SAVE)

In response to the Supreme Court's decision that prevented President Biden from canceling student debt, on June 30, 2023, Biden implemented the income-driven repayment (IDR) plan called Saving on a Valuable Education (SAVE).

SAVE offers student loan borrowers new and improved benefits, such as forgiving a student loan with an original principal amount of $12,000 or less after 10 years of payment (rather than the previous 20 to 25 years).

SAVE replaced the existing REPAYE plan and those already enrolled in REPAYE were automatically enrolled in SAVE. The full slate of SAVE regulations were set to go into effect on July 1, 2024. However, during the summer of 2023, three significant features went live:

• The amount of a borrower’s income protected from payments will rise to 225% of the federal poverty guidelines from 150%. So, a single borrower earning less than $32,805 annually ($67,500 for a family of four) will have no payments. Those loan holders who don’t meet this threshold will save at least $1,000 per year.
• Interest charges not covered by a borrower’s monthly payments will be halted so that no unpaid interest can increase the amount a borrower owes.
• Married borrowers who file taxes separately won’t have to include a spouse’s income in the calculation of their payment amounts.

For more information about SAVE, see the Department of Education’s fact sheet .

On July 18, 2024, a federal court blocked the operation of the Saving on a Valuable Education (SAVE) Plan until court cases centered around the Income-Driven Repayment (IDR) plan can be resolved. In the meantime, the Department of Education has moved borrowers enrolled in the SAVE plan into forbearance, whereby they will not need to make payments, nor will interest accrue on their loans.

Options exist for borrowers nearing Public Service Loan Forgiveness (PSLF). Borrowers can "buy back" months of PSLF credit if they reach 120 months of payments while in forbearance or switch to a different IDR plan.

The Public Service Loan Forgiveness Program 

The Public Service Loan Forgiveness Program is designed specifically for people who work in public service jobs, either for the government or a nonprofit organization. People who participate may be eligible for federal debt forgiveness after 10 years on the job and 10 years of payments.

Don't Wait, Contact Your Lender

Details of these federal programs are available online, as is information about eligibility.   It is important to remember that none of these programs are available to people whose student loans have gone into default .

A good first step is to contact your lender as soon as you realize you may have trouble keeping up with your payments. The lender may be able to work with you on a more doable repayment plan or steer you toward one of the federal programs.

There is an upside to student debt. If you keep up your payments, your credit score will improve. That solid credit history can be crucial for a young adult trying to secure that first car loan or home mortgage. 

A true worst-case scenario involved a man who found armed U.S. marshals on his doorstep. He had borrowed money 29 years earlier and failed to repay the loan. The government finally sued. According to the U.S. Marshals Service, several attempts to serve him with a court order failed. Contacted by phone in 2012, he refused to appear in court.

A judge issued an arrest warrant for him that year, citing his refusal to appear. When the marshals finally confronted him outside his home, he told CNN, “[I] went inside to get my gun because I didn’t know who these guys were.”

That’s how you end up facing an armed posse of U.S. marshals, with local police as backup, for failure to pay a student loan of $1,500. The man said he thought he paid the debt, didn’t know about the arrest warrant, and didn't remember the phone call.

However, even this sorry story has a reasonably happy ending. Hauled into court at last, the man agreed to begin paying off his ancient student loan, plus accrued interest, at the rate of $200 a month. After 29 years of interest, the $1,500 debt had grown to around $5,700.

Do Student Loans Go Away After 7 Years?

Typically, defaulted student loans are removed from your credit report after seven years, like all defaulted loans. This primarily applies to private student loans. Note that this isn't a reason not to pay your student loans because you still owe the debt. And if the debt gets transferred, it may show up on your credit report again.

Can Unpaid Student Loans Result in Your House Being Taken?

No, unpaid student loans do not result in your property being seized. Student loans are unsecured , so they do not have any collateral that can be seized legally. A private lender, such as a bank, would have to sue you and win to seize your assets. However, your wages can be garnished, or your tax refunds withheld with federal loans.

Do Mortgage Lenders Look at Student Loans?

Yes, they do. When assessing your creditworthiness, mortgage lenders will look at all your outstanding debt, including student loans.

The government and banks have an excellent reason for working with people having trouble paying off their student loans. You can be sure that they are as anxious to receive your loan payments as you are to repay your debt.

Remember to alert the appropriate parties as soon as you see potential repayment trouble ahead. Ignoring the problem will only make it worse.

Federal Reserve Bank of St. Louis, FRED. " Student Loans Owned and Securitized ."

U.S. Department of Education. " How the New SAVE Plan Will Transform Loan Repayment and Protect Borrowers ."

Federal Student Aid. " Student Loan Delinquency and Default ."

Federal Student Aid. " Income-Driven Repayment Plans ."

Supreme Court of the United States. " Biden, President of the United States, et al. v. Nebraska et al ."

The White House. " Fact Sheet: President Biden Announces Student Loan Relief for Borrowers Who Need It Most ."

U.S. Department of Education. “ Department of Education Updates on Saving on a Valuable Education (SAVE Plan) .”

Federal Student Aid. " Public Service Loan Forgiveness ."

CNN Money. " Man Arrested by U.S. Marshals for Unpaid Student Loan ."

Experian. " What Happens if You Default on a Student Loan? "

Consumer Financial Protection Bureau. " What is a Judgment? "

myFICO. " Get the Score Lenders Use to Evaluate ."

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7.2M Americans Over 50 Hold Student Debt, New Report Shows

Urban Institute researchers say the financial burden not only puts a strain on the borrowers themselves but also the social welfare programs designed to be their safety net.

By  Jessica Blake

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A recent report from the Urban Institute shows student loan debt isn’t just harming young people’s financial futures—it’s weighing on older generations, too.

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Student loan forgiveness was a key component of President Biden’s 2020 campaign. While the policy has faced legal and legislative challenges , the issue of Americans’ more than $1 trillion in student debt has been thrust into the national conversation, mostly centering on loan forgiveness for Generation Z young professionals and middle-aged millennials.

However, a recent series of reports and blog posts published by Urban Institute shows that older adults are also struggling to pay back their student loans.

By analyzing a nationally representative sample of credit records from roughly four million adults aged 50 and older, Urban Institute’s report concludes that as of August 2022, approximately 6 percent of older adults—or 7.2 million Americans—have yet to pay off their student loans. Among those same borrowers, 8 percent, or 580,000 individuals, are behind on payments. The median amount of delinquent debt was approximately $11,500.

It’s a financial burden that can leave many seniors struggling to retire and ultimately exacerbates the poverty levels of older Americans, Urban Institute researchers say. As a result, it not only strains the individuals but also the social welfare programs designed to function as a safety net.

The findings of this report reflect similar results from previous studies conducted by groups such as the Education Trust and AARP. But, despite the wealth of data, Jason Cohn, a research associate from the Urban Institute’s Center on Education Data and Policy, noted that the impact of loan debt on older adults is often overlooked. But when you draw attention to the fact that loan debt can force seniors to work far longer before retirement or exit without the dignity of a plan for long-term care, it can give people a new perspective.

“Looking at it through this lens of ‘Will they be able to retire with financial security?’ is something that’s a little bit different,” he said.

What’s not different, regardless of age, is the trend of racial disparities among debt holders.

The report’s findings show that individuals aged 50 and older from American Indian and Alaska Native (AIAN), Black, and Hispanic communities are disproportionately burdened by student debt. The overall delinquency rate among all borrowers was 8 percent, but the rates among racial minority groups were as much as seven percentage points higher at 10, 13 and 15 percent for Hispanic, Black and AIAN communities, respectively.

Financial policy experts cite labor market discrimination, wage gaps, inequities in generational wealth and prejudices such as redlining, underbanking and lack of access to tax-advantaged savings as systemic barriers that make wealth accumulation challenging for racial minorities, particularly for Black and Indigenous Americans and people of color (BIPOC).

As a result of these barriers, they say, BIPOC individuals are more likely to depend on student loans to put themselves or their children through higher education.

“These disadvantages can compound over decades within and across generations, making these borrowers less able to repay their loans on time,” wrote Mingli Zhong, an Urban Institute senior research associate who specializes in borrowing behavior. “Over all, older adults are carrying more debt, not just student loan debt but all kinds of debt [medical, mortgage, etc.] into retirement,” she later told Inside Higher Ed .

That, combined with the fact the U.S. population is aging and more people are nearing retirement, has consequences. Later in life, borrowers who can’t pay off their student loan debt are more likely to experience poverty and rely on social welfare safety net programs such as the Supplemental Nutrition Assistance Program, Medicaid and Supplemental Security Income.

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In some cases debt can be so crippling it puts an individual at risk of losing a portion of their Social Security benefits—a lifeline of guaranteed income for retirees. In 2015, at least 114,000 Americans had their Social Security benefits garnished because they couldn’t make their student loan repayments, the Urban Institute reports. Annual tax refund benefits can also be seized to pay off delinquent loans.

Zhong said she anticipates an increasing strain on these and other social safety nets over the course of the next five to 20 years. Retirement planning is already becoming an increasingly personal responsibility, she said, but growing student loan debt among seniors only furthers that.

In response, the Urban Institute recommends federal policymakers respond to the acute symptoms by trying to cancel debt for long-term borrowers, establishing fair repayment terms, encouraging employers to match contributions to student loan payments and ensuring that older borrowers can keep their Social Security benefits.

The Biden administration is already attempting to take some of these steps. The Education Department in April released a set of draft rules that would ease the burden of student debt among older borrowers by offering one-time relief to those with Parent Plus loans and those who have been repaying their own loans for 20 years or more.

The public has sharply divided views on the subject of student debt relief, however, and it’s uncertain whether Biden’s policies will take effect before the end of his term. But some student loan policy experts hope that the timing of Urban’s report release could help increase support.

“The misconception that student debt is a young person’s issue is a trope that opponents of debt relief like to push out,” said Aissa Canchola Bañez, policy director for the Student Borrower Protection Center. “And so, the context in which this report is being done really gives us a chance to illustrate the positive impact that the Biden-Harris administration’s upcoming rules, when they are finalized, will have on folks, particularly older Americans.”

But not all policy experts agree.

“All these recommendations are doing is just further subsidizing the problem,” said Michael Brickman, a senior fellow at the American Enterprise Institute. “As we’re trying to treat the symptoms, we’re making the disease worse.”

As a representative of the conservative think tank, Brickman believes the underlying issue—that college programs cost too much and often don’t deliver a strong enough financial return—must be addressed first.

He suggested that policymakers must hold the institutions themselves accountable for student debt, by requiring them to co-sign student loans.

“Institutions should not be able to cash checks from the government to pay for programs that consistently do not deliver a financial return,” Brickman said. “The college or university should be held accountable, and they should have direct and significant skin in the game with respect to what their students borrow.”

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ANALYSIS OF EDUCATION LOAN: A CASE STUDY OF NATIONAL CAPITAL TERRITORY OF DELHI

• R. Srinivasan
• Published 2011
• Economics, Education

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Financing higher education and education loans in india: trends and troubles, the students ways of financing the higher learning education at the open university of tanzania, the precarious path of student migrants: education, debt, and transnational migration among indian youth, impact factor.1.14: mayas publication [issn: 2395-5929] ugc jr. no. : 45308: paper id: 13170801, análise dos fatores de incentivo aos estudantes universitários: efeito do crédito estudantil sobre o comportamento dos alunos, educational empowerment: evolution, innovations and challenges of educational financing in commercial banks, 8 references, student loan by commercial banks: a way to reduce state government financial support to higher education, issues in educational loan repayment in malaysia, indian higher education reform: from half- baked socialism to half-baked capitalism, an economic analysis of student loan default, introduction to econometrics, the development perspective, funding higher education and wage uncertainty: income contingent loan versus mortgage loan, multivariate analysis of student loan defaulters at texas a&m university., related papers.

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Navigating the student debt crisis: seven lessons for higher education institutions.

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President & CEO at American College of Education.

Payments for federal student loans resumed in October after a three-year pause brought on by the Covid-19 pandemic. Millions of households are carrying a heavy financial burden, and this impacts a large population of Americans. In fact, about 43 million federal student loan borrowers still have more than $1.6 trillion in outstanding student loan debt, and the average federal student loan debt balance is $28,950, according to Forbes Advisor . These extreme debt amounts can take decades to pay off .

The extensive impact of federal student loans on the lives of borrowers disrupts many people's ability to pursue certain life events , including homeownership, traveling or even having children. The financial pressure can also lead to disruptive mental health distress.

A dwindling 36% of Americans have confidence in higher education , but the benefits and importance still remain. Those with a bachelor’s degree earn up to 75% more than those with a high school diploma. Ultimately, more education and higher salaries often run parallel , but the challenge lies in the fact that graduation rates are troubling. This, combined with rising tuition and student debt, keeps higher education inaccessible and unaffordable for many. Students often must choose to opt out of higher education, quit after accruing debt or allocate much of their increased earnings toward debt payments.

Student loan discussions nationwide have largely focused on canceling accrued debt, but tuition inflation has risen faster than regular inflation, which directly contributes to student debt levels. I believe it’s important to note that higher education institutions play a role in tuition inflation, but accountability is limited.

Why is tuition increasing?

Before we can determine why tuition is increasing, we must check all sources of tuition increases and identify if they’re associated with what Carnegie Mellon professor Michael Smith may describe as our ultimate goal as higher education leaders : to make "affordable, high-quality education" available to everybody.

The Wall Street Journal examined (paywall) the financial statements of 50 universities identified as flagships and found that rising tuition is connected to investments in dormitories, amenities, additional layers of administration, sports programs and other similar costs. From my perspective, these investments are important in some regard, but this degree of spending that is unrelated to teaching and learning requires institutions to take some responsibility for tuition inflation.

In order to restore credibility to higher education, I believe more institutions need to provide reasonable tuition levels and refocus on providing high-quality learning.

What can colleges learn from institutions that don’t take federal student loans?

There are some higher education institutions, my own included, that offer education experiences and affordable tuition while excluding federal funding entirely from their payment options. Based on my experience, there are a few lessons I believe higher education leaders in more traditional institutions can consider moving forward.

1. Investment strategy and governance are critical. You can align investments toward initiatives that support student success. Ensure your executive team and board of trustees commit to a strategy and revenue model that keeps costs and tuition manageable. How much are you investing in non-academic staff, marketing, amenities, athletics and Title IV administration?

2. Quality online learning opens doors. High-caliber online programs can provide flexibility for students and help facilitate strong learning outcomes and graduation rates. When properly implemented, I've found online learning can help institutions reduce operational costs as well.

3. Centralized curriculum models create consistent learning. Models like this can enable institutions to provide a quality curriculum that is updated regularly and aligned to market needs through regular and direct feedback from employers, students, faculty, graduates and other stakeholders. The addition of enriching content such as multimedia content, animations, gaming, simulations and case studies can increase student engagement.

4. Your faculty’s roles matter. Are your staff's primary responsibilities to educate students and ensure they’re learning what they need to be successful? Or does the majority of their time go toward research and scholarship? Determine what your students need, and then align your recognition and incentives. A practitioner-led faculty model can help keep instruction relevant and engaging.

5. Data on student progress can drive interventions. Survey your students on an ongoing basis to learn about their engagement and progress, and commit to continuous improvement. Leverage feedback from students to make meaningful and ongoing enhancements and invest in the support that students need to be successful.

6. Program selection is important. Align program offerings to today’s market and employer needs, as appropriate. This alignment can help equip graduates to get ahead in their careers and boost the returns on their investment of time and tuition.

7. Additional student payment options and reduced access to federal student loans could help decrease reliance on subsidies . You can consider strategically adopting course-by-course payment schemes and assess what level of federal student loans are needed and in the best interest of students.

From my perspective, taking these lessons and turning them into action could help with the credibility gap in higher education and the survival of some institutions. The power of change is in the hands of higher education leaders. It’s possible for the value proposition of higher education to improve and for students to graduate with less debt. Leaders in higher education should take steps to ensure college is a desirable and accessible pathway by making tuition more affordable while maintaining a rich and relevant learning experience.

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Digital Lending Case Studies: Student Loans

To learn more about how banks are moving away from paper-based lending processes, the American Bankers Association conducted a survey, drawing responses from nearly 200 banks. The resulting report, The State of Digital Lending , provides a new window into the current landscape in digital lending.

Here are case studies of two banks that set out to expand their student loan capabilities. One partnered with a third-party provider, while the other developed its own technology in-house.

WSFS Bank listened to its customers.

“We heard customers talking about their kids getting ready to go to college or having just graduated with high burdens of student loan debt,” said Lisa Brubaker, senior vice president at WSFS Bank . “We were looking at ways we could be more useful to our customers.”

WSFS Bank is the oldest and largest locally managed bank and trust company headquartered in the Delaware Valley.

“As a community bank, we want to be able to provide solutions our customers are asking us for,” Brubaker continued. “One area where we saw a gap was in having a viable student loan program. We didn’t have any avenues for education lending in general except for general equity and unsecured loan products, which didn’t really work for our customers. Obviously, we didn’t want to encourage our customers to look outside of the bank because we didn’t offer the solutions they need. We wanted to help those graduates come out with something more affordable for them long-term.”

To respond to this need, WSFS Bank in 2013 adopted the LendKey platform for originating student loans. This partnership approach enabled WSFS Bank to quickly deliver a program to market that uses the bank’s underwriting criteria and standards. The bank keeps the asset on its balance sheet and LendKey services the loan.

Borrowers have two avenues to find their way to WSFS Bank:

• They can visit the LendKey online marketplace, which is open to anyone, and peruse a buffet of choices that match their needs. If they are in the WSFS Bank service area—Delaware, Pennsylvania and New Jersey—WSFS Bank will be offered as a choice.
• They can go to the WSFS Bank website and click on Education Lending, where the LendKey offering for both student loan consolidations/refinances and private student loans is available under the bank’s own brand.

Applicants for consolidation/refinances can receive a credit decision within a day, as long as they have provided the necessary supporting documents.

WSFS Bank has made a series of acquisitions over the years, and the student loan platform has easily adapted. “That has actually worked out very well,” said Brubaker. “Most of those acquired banks didn’t have a robust student loan platform in-house, so getting access to the LendKey platform brought this additional benefit to joining the legacy organization.”

But it’s not just about addressing the demand for student loans. Because the heavily marketed LendKey platform drives new customers to the bank’s offering, the technology opens the door to a whole new cohort of customers for the bank to cross-sell.

“The LendKey offering has been a good way for us to get into a market that enables us to reach a broader base of customers,” said Brubaker. “It offers technological efficiencies that save us time and money, since applications are already filled out with LendKey. It has worked well for us and been a positive experience. It has certainly opened our eyes to other, similar partnerships.”

Darien Rowayton Bank and the student lending platform so strong that it rebranded the bank.

In a short time, Darien Rowayton Bank of Connecticut has evolved from a traditional community bank to a national online lending entity with customers in all 50 states, the District of Columbia, and Puerto Rico. The bank’s online student lending business—which was branded Laurel Road—uses proprietary technology to streamline and fully digitize loan processes.

Laurel Road has become such a powerful brand, in fact, that Darien Rowayton recently changed its name to Laurel Road Bank .

Laurel Road has helped thousands of professionals with graduate and undergraduate degrees to refinance and consolidate more than $3 billion in federal and private school loans since 2014, saving borrowers an average of more than $20,000 per loan—more than $400 million in savings to date.

Serving technology-driven consumers

“With millennials, online lending is really table stakes,” said George Sclavos, chief financial officer at Laurel Road Bank. “When we chose to target a highly sophisticated millennial base, we knew that our customers would accept nothing less than a best-in-class online experience and we built a platform to enable them to complete the entire process online, from application to e-signature.”

The application process is speedy, completed in just a few minutes. Applicants discover their rate options instantly after filling out a short online form—no hard credit pull is required to view these initial rates. (The system calculates a debt-to-income ratio based on a variety of factors and does the verification later.) Borrowers easily upload a few documents to verify their identity and the desired student loan.

Once approved—a credit decision is usually made within 24 hours of receiving the customer’s documentation—the bank sends final rates, terms, and disclosures via secure electronic communications. The borrower approves the terms and e-signs a promissory note—all online from start to finish. The entire process can be done without talking to a human—or if preferred, by talking with a human via secure online chat and a proprietary email system.

Implementing a digital lending platform—build or buy?

Laurel Road initially used a third-party vendor’s platform to manage the student loan refi application process, but determined that it needed to elevate its customer experience beyond what the third-party platform could offer.

“We did surveys to see what type of experience customers were specifically looking for and used that to build our proprietary loan origination system,” said Sclavos. “We will use outside third parties where a digital capability is a commodity or an industry standard. But where we think we can build a competitive advantage, we’ll invest in our own technologies.”

The student lending platform was built by the bank’s team of 15 developers, augmented by outside contractors as needed. The platform went live in early 2016 and has been enhanced over time, with upgrades released about once a month.

Positive results of the investment…

• Rapid growth without adding staff. The bank was able to grow its student lending business by about 60 percent in 18 months without adding any operational headcount. Originations are up about 50 percent year over year, with loans sold to banks around the country. “It has been a great product for us and for the other banks [to which the loans are sold],” said Sclavos. “With the digital lending platform, we have been able to expand into other types of lending and diversified our balance sheet.”
• Satisfied borrowers. “We survey every customer who goes through the loan application process,” said Sclavos. “We often hear that they’re very amazed they can do the entire process without ever talking to a human, how fast and how easy the process was—and of course, how much we’ve been able to save them with a lower interest rate.” Net promoter scores for Laurel Road are in the high 60s, compared to the low 40s for the banking industry at large.

After looking at more than 100 different service providers for a comparable mortgage lending platform, the bank chose to develop in-house there as well. The 100-percent digitized mortgage platform beta version rolled out at the end of 2017, integrates with 40-plus other service providers and offers a host of custom features for underwriters and processors on the back end.

Next month we’ll look at a case study of a bank that partnered with a fintech firm to enhance its small business lending capabilities.

Download the full report.

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Your journey towards financial independence, education loan – a personal case study.

In the previous post I had outlined a plan that can be used for paying the Graduation expenses of a child through Education loan. Now, whether you are paying these expenses through invested money, current active income or through an Education loan, I am of the opinion that parents are responsible for the graduation expenses for the child. In effect this means, even if you take a loan, you should be paying it back and not the child. Of course, this will differ if the parent is economically weak, in which case it makes sense for the child to take care of the loan repayment once he/she gets a job.

When it comes to post graduation, my thoughts are quite different. I feel that children need to be responsible for their post graduation expenses and fund it through Education loans to be paid back when they start their working life. A second professional degree needs to be funded by the children as the purpose of it is to get a better career, after the first degree has been sponsored by their parents. Note that I am talking of expensive degrees such as an MS or an MBA here, not PG degrees from government universities that are relatively inexpensive even today.

When my daughter Rinki was looking at admissions to a good B school, she and I discussed extensively on these issues in order to figure out an optimal way in which we could do this. I will not go into details, if you are interested look up the posts in the “Education” category of my blog.She had been groomed in a way that she was quite prepared to take the loan on her own and pay it back in a reasonably short time. Her admission in the BM program in XLRI meant the costs would be 21 lacs for the 2 year course. Assuming another 1 lac for travel and personal expenses it meant an outlay of 22 lacs. While I wanted her to be responsible for this amount, I did not see much point in paying a huge amount of interest to the bank. Based on this, the plan we worked out was as follows:-

• I will loan her the first year expenses and the second year will be funded by the bank. She will first pay off the bank loan to minimize the outgo of interest.
• Repayment to me could be done later and would depend on factors like whether she wanted to do something on her own ( instead of a job) etc.
• Based on this we got a 12 lacs loan sanctioned from the SBI branch at XLRI. The plan is to pay the loan in 5 years with the EMI being 25,173.
• The loan is in her name, with her mother being the co-borrower. There is no collateral needed for the SBI scholar loan.

This plan is in motion now and I have arranged to pay the fees for the first two terms till now. I have also kept money aside for the third term fees that need to be paid in November. Though we have sanction for 12 lacs loan, we may not take the full amount – in case some surplus money is available next year, I may pay off part of the year 2 fees also.

If readers have any queries about the plan or anything about the loan, I will be happy to answer these.

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One thought on “ education loan – a personal case study ”.

Upon completion of 12th class exam, Miss Mini joined an Engineering college. Since she was aged 17 years, the education loan documents were singed by her mother on her behalf. After two years, the mother of Miss. Mini expired and she discontinued her education and joined a private company for a job. When the bank demanded repayment of the loan amount from Mini, she refused to pay stating that she was a minor at the time of availing loan and that she has not signed any loan documents.

a. Discuss whether bank can legally recover the amount from Miss. Mini

b. What would have happened if the signature of Miss. Mini had been obtained at the time of disbursement of the loan; instead of her mother’s signature?

Can I know the answers for this explanation for this case study

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8 million are in student loan forbearance under Biden's SAVE plan. Are you one of them?

Did you wake up to an email on Friday stating your student loans are in forbearance? If so, you are one of eight million Americans.

Borrowers enrolled in the SAVE (Saving on a Valuable Education) Plan are currently in forbearance. How long the forbearance goes on remains to be determined.

The student loan relief program, introduced by President Joe Biden's administration in 2023, is now in court where it is being contested. At the end of July, an administrative stay was granted by the U.S. Court of Appeals for the Eight Circuit in St. Louis at the request of Missouri and six other Republican led states, per The Tennessean . As a result, the plan has been blocked from continuing.

Here's what to know about the forbearance and the legal battle over SAVE.

What is student loan forbearance?

Student loan forbearance is a temporary postponement or reduction of your student loan payments due to financial difficulty. During this temporary period, you may still make smaller payments toward your loan. Borrowers typically need to apply to receive forbearance. However, the Biden administration has chosen to freeze payments for all SAVE borrowers as the legal battle over the plan continue.

“Borrowers enrolled in the SAVE plan will be placed in an interest-free forbearance while our administration continues to vigorously defend the SAVE plan in court,” Miguel Cardona, the secretary of education, said in a statement in July. “The Department will be providing regular updates to borrowers affected by these rulings in the coming days.”

Fast facts about the SAVE student loan plan

∎ SAVE is an IDR (Income Driven Repayment) Plan that bases your monthly payment on your income and family size. It replaced the Revised Pay As You Earn (REPAYE) Plan. Borrowers who were on the REPAYE plan will automatically get the benefits of the SAVE plan.

∎ The plan lowers payments for almost all borrowers compared to other IDR plans. Payments are based on a smaller portion of your adjusted gross income (AGI).

∎ It has interest benefit: If you make your full monthly payment but it is not enough to cover monthly interest accrued, the government covers the rest of the interest accrued that month. This prevents your balance growing due to unpaid interest.

∎ Borrowers in the plan who originally borrowed $12,000 or less will be granted forgiveness after as few as 10 years.

∎ In the summer of 2024, more elements of SAVE will go into effect, further lowering payments for borrowers with undergraduate loans.

Why is the SAVE plan in court?

When the SAVE plan was first implemented by the Biden administration in 2023, it was met with criticism and pushback from Republicans. Part of the plan was blocked in June by two federal judges in Kansas and Missouri. In July, Missouri Attorney General Andrew Bailey and seven state attorneys requested the 8th Circuit to block the plan in its entirety, according to The Tennessean.

For Bailey, the ruling was a win for the Constitution. On the social media platform X , he said, "Congress never gave Biden the authority to saddle working Americans with half-a-trillion dollars in other people's debt."

🚨BREAKING: The Court has granted our motion to BLOCK Joe Biden’s illegal student loan plan. Congress never gave Biden the authority to saddle working Americans with half-a-trillion dollars in other people's debt. A huge win for the Constitution. — Attorney General Andrew Bailey (@AGAndrewBailey) June 24, 2024

When will I need to begin paying my student loans?

Currently, there is no set date for when the student loan forbearance will end or when borrowers will resume payment on student loans.

Nina Tran covers trending topics for The Greenville News. Reach her via email at [email protected] .

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6 student loan moves to make now if you still don't have financing

By Tim Maxwell

Edited By Angelica Leicht

August 16, 2024 / 9:54 AM EDT / CBS News

So, you're starting a new college year in the coming weeks, or perhaps even as soon as this week. You've sorted out your schedule and you're excited to get started. But there's one major problem: Your financing isn't fully lined up yet. With the clock ticking, you must figure out how to cover your remaining expenses before your college classes begin.

Thankfully, if you're in this situation, there's still time to get your financing in order before the upcoming school year. Here's how you can do that.

Don't wait until it's too late. Start comparing your private student loan options now .

Here are a few moves you can make now to secure the funds you need.

1. Exhaust federal student loan options

To be eligible for federal, state or institutional aid for the following academic year, you must submit a Free Application for Federal Student Aid (FAFSA) by the deadline . If you've already applied, you can make corrections through September 14 for the current school year.

Federal student loans typically offer favorable terms, including lower interest rates, borrower protections, flexible repayment options and the potential for student loan forgiveness. The FAFSA also helps you qualify for grants and scholarships. Since these options don't need to be repaid, they can significantly lower the overall cost of your education .

Stacey MacPhetres, the senior director of education finance at EdAssist by Bright Horizons, notes that subsidized federal student loans may save you money while attending school at least half-time. 

"Any portion of a student's federal student loans that are subsidized will not accrue interest while the student is enrolled in college. Private loans are not subsidized and would always accrue interest during periods of enrollment," MacPhetres says.

Find out more about how affordable the right private student loans could be .

2. Contact your institution's financial aid office

"If a student needs to get a loan quickly before the semester begins, the first step is to contact the college financial aid office ASAP," says student loan counselor and freelance writer Kat Tretina. "You may be eligible for institutional emergency loans to cover the remainder needed. Or you may not have taken out all the federal student loans you were eligible for, so the financial aid office can make sure you take advantage of all available aid."

Tretina also notes that payment plans are another valuable option for making tuition, fees and room and board more manageable. 

"Rather than paying a lump sum upfront, you make monthly payments—usually without any interest. Making payments can give you time to find other financing if needed," Tretina says.

3. Shop for private student loans to fill in gaps

If your government and institutional aid aren't enough to meet your financial needs, you might consider adding in private student loans to cover expenses. While federal student loans generally offer lower interest rates, you may qualify for private student loan rates near 4% with excellent credit and a cosigner.

Private student loans also typically offer higher borrowing amounts than federal student loans. For example, undergraduate students can borrow between $5,500 and $23,000 per year in federal loans, up to a total aggregate limit of $57,500 for dependent students. Conversely, private student loans can cover up to the full cost of attendance, including tuition, fees, room and board and other school-related expenses.

If you opt for private student loans , understand the process may take time. 

"The lender has to certify the loan with your school, so depending on how quickly your college responds, it can take several weeks," says Tretina.

4. Contact your state's education agency

You may still qualify for government funding even if you've exhausted federal financing options. Many states offer their own financial assistance programs, grants and scholarships. Contact your state's higher education agency to discover what state opportunities are available. 

For example, some states offer low-interest student loans, tuition assistance programs and work-study programs for state residents. Just make sure you understand the application deadlines and requirements for any state programs you're interested in. 

5. Apply for scholarships and grants

Scholarships and grants are essentially "free money" you don't have to repay and can be an excellent option if you missed the deadline for financial aid. Search for scholarships using the U.S. Department of Labor's free scholarship search tool and other resources. Look for scholarships that match your experience, achievements and background. Also, ask your financial aid counselor about grants and local scholarships they recommend.

6. Look into emergency aid

When consulting your financial aid office, check to see if you qualify for any emergency student loan programs. Many colleges offer low-interest and interest-free emergency loans to students dealing with unforeseen circumstances. You usually can't use these loans for tuition, but they might help you pay for urgent expenses like food, medical expenses and last-minute travel costs.

"These loans are generally made for small amounts — often $1,000 or less — and have short repayment timelines," says Leslie Tayne, founder of Tayne Law Group and author of Life and Debt. "So an emergency loan may not be a great option if you need a significant amount of money."

The bottom line

If you're a college student in need of funding for school, the options outlined above can help you access funds for the upcoming academic year and can also help you plan for future semesters. When applying for financial aid, you may avoid delays by filling out applications accurately and responding promptly to requests for supporting documents. Also, applying with a cosigner may accelerate your timeline and potentially improve your odds of approval for student loans . 

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Student Educational Loan Fund Inc. Harvard Case Solution & Analysis

Home >> Finance Case Studies Analysis >> Student Educational Loan Fund Inc.

Rick Miller controls the Student Educational Loan Fund (Self), which provides loans to students at Harvard Business School. SELF changed conditions of student loans with a variable interest rate with semiannual payments of fixed interest rate loans with equal monthly payments. Miller has to decide how to finance the SELF out a new mix of credit. SELF can use a wide range of interest rate derivatives to change the terms of its existing financing. "Hide by Peter Tufano, Cameron Poetzscher Source : Harvard Business School 13 pages. Publication Date: December 11, 1995. Prod. #: 296046-PDF-ENG

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