Today, we will address a very important question is there a student debt crisis . In many of us are well aware of the everexpanding student loan market and the latest estimates are that nearly 40 million americans are laden with 1. 3 trillion worth of student ebt. One in four of the borrowers is either in delinquency or default. Last years graduating class had an average of 35,000 in student ebt. Those are striking numbers. The Obama Administration recently announced two policy changes and president ial candidates have focused on a variety of alternatives of ways to lower the debt burdens. Todays speakers are two leading voices on student debt. Rohit chopra was recently named special adviser to the u. S. Department of education. He previously served as the assistant director of the Consumer Financial protection bureau. He led that agencys work on behalf of students and young consumers. The secretary of treasury named im as the agencies First Student loan ombudsman. He has frequently testified before congress on alleviating student debt burdens and private tudent loan performance. Susan is a colleague. She is a professor of education, Public Policy, and economics at the university of michigan. Also codirector of the ford schools policy initiative. Susan is one of the countries top advocates for accessible Higher Education. She has testified before congress on education and tax policy and is widely consulted on student aid reform, including a federal reserve, the department of education and treasury, and with the department of economic advisories. She also writes with a New York Times and if you are on twitter, i encourage you to follow her for an informative and witty commentary. First, ignored about todays ormat. Each of our panelists begining with susan will kick things off with three opening remarks. I will then have the pleasure of moderating a conversation with our experts. I will start with a few questions of my own before opening things to the audience. Please write your questions on the notecards you received and we will have volunteers circulating to collect them from you during the program. If you are watching online, please send us your questions on twitter. Using the hashtag e. P. I. Student debt. Lets get started. Susan, the floor is yours. Ms. Dynarski thank you, everyone. Im going to start with the data. I want to start by talking about if there is indeed a crisis in student debt, where is it . Were at a university in a school of Public Policy so we should be addressing this question with data as opposed to say introspective and thinking about our own experiences or those of our friends or colleagues. Also, instead of maybe just reading the latest dramatic piece in the news about a distressed borrower, but rather by analyzing the data. Data has been a problem in this context. In part, anecdotes have filled the void. If there is not a good data on the problem, the arising and anecdote will fill the void. Department of education, which is responsible for the federal loans in this country, has not been terribly forthcoming and releasing to the Public Information about who borrows, who defaults, their experiences. That is changing a bit and as of this past fall, we have some excellent data on debt to default for people who have borrowed since the late 1990s or so up until the present. What im going to say here is based on the analysis of that data. What does the data say . They say you should erase from your mind if you are thinking of who the face of the student debt crisis is, you should erase it from your mind the image of a yale graduate or n. Y. U. Graduate graduate or even an um graduate. Everyone who graduate with a ba is relatively likely to default. People who graduate have a low default rates. The default rate to drop in the schools selectivity. The more selective the school is, the lower the rate of default. For schools like um and harvard and columbia, about 5 is what the default is. That is what it was before the recession, during. People who graduate from elite schools are pretty well buffered from economic disstress. Not everybody, but were talking about averages and tendencies. So you should also not think of folks who are going to graduate chool. People who graduate i know you dont like debt but it is whether it is the face of the country. Everyone would rather have stuff free than pay for it. That is an economic principle. [laughter] you have your certificate now in economics. Grad students a borrowed the least likely to default because they make good money compared to other folks. Graduates people who borrow for graduate school are unlikely to default. Graduates of select schools like um might borrow 30,000 total. It is a typical debt for people graduating but they toned make good money so they can support a debt of 30,000 and pay it back. That is who it is not. One thing to note the profiles of the people who are focused on the media. Hen the media focuses on tudent debt crises, the people they profile people at columbia, nyu, people with graduate degrees. This week am a graduate of Connecticut College spoke about their experience with 200,000 in debt. That is a vanishingly unlikely amount of debt. Few people have that much debt and people who graduate with graduate degrees tend to not default. Here was a lovely article in the New York Times that enraged me into writing several of shot posts from a guy who graduated with three degrees from Columbia University and subsequently defaulted on all of them and was urging others to follow his example and setting it up as a leader of a student loan revolt. These are not the victims of the student loan crisis. Who is . The face of student loan distress is a dropout from a nonselective college. A person who spent a year or two at a forprofit college or Community College or nonselective fouryear college. This is all based on the data. If you look at who is defaulting, that is who it is. They are firstgeneration college students. They grew up poor. They entered college late to improve their job market schools. Many were running away from the weak job market of the recession and went to one of these schools to get a better job. They borrow relatively little because they spent relatively little time in school. They dropped out after a year or ix months. Maybe 5,000 to 10,000 a year total. In total, they borrowed 5,000 o 10,000. They are treated with low earnings. They enter poor, they left poor. The typical loan and defaults is less than 10,000. 5,000 is the typical loan in efaults. 44 of the dollars in default are coming from forprofit nstitutions. More than 1 3 of students who borrowed to attend a Community College or forprofit college during the recession defaulted within five years. For the people attending a selective ba institution, its a 5 . The problems are at the Community College and at the forprofit institutions. So this is who i have firmly in mind when i think about victims of a student debt crisis. Low income, firstgeneration students attending Community College for a forprofit college. Students of Corinthian Colleges were defrauded into borrowing for a nonexistent education. A person laid off in their job who tries to pick up some skills at the local Community College and borrowed to do so and is exiting with low earnings. In my opinion, if there is a crisis of any sort, its a crisis of lower earnings in our country. We lack a safety net. We have a very large number of people earning very low earnings and who cannot handle even 5,000 in debt as a result. Mr. Chopra thank you for having me and thank you to all of you for being here. I have recently joined the department of education and just a few days into the job. My comments today represent my own opinion. I often get the question why do we have Student Loans . I always answer its important to remember we have Student Loans for a very good reason and that is to ensure that people who might not be able to afford to go to college can make that investment into themselves, which can payoff very big when done right. But, things have changed so much in the past 10 years that its hopeful to think through that. Many people concerned about student debt might come from the education world. I probably come from the other stepchild of this world, which is thinking about it from a Consumer Financial markets perspective and those of us from our lens, we are really colored and shaped by the foreclosure crisis we saw in the past several years. For those of you from michigan, you probably know very well that problems in the Mortgage Market absolutely devastated parts of michigan and this was not unlike other parts of the country. Today, we have a Mortgage Market that is very different but i hink some events that really changed the student loan market too. I think it is worth mentioning. To the financial crisis, there is no question that the financial crisis had two real big effects. One is that it really eroded family wealth. Actually, trillions of dollars in Household Wealth of that he waited in the form of home equity, retirement savings. Many families felt more stress about being able to contribute toward their dependent childs education. At the same time, the financial crisis hit state budgets very hard and there was some very substantial cuts to public Higher Education. I want to echo something sue said. When you think about who goes to college, you really want to remember the Biggest Group is those who attend Public Colleges. The mix of families feeling more inancially stressed and higher tuition, which by the way is not just something that is recent. I understand that 40 years ago, undergraduate tuition at the university of michigan was 800. Inflationadjusted, thats about four or five times higher. The tuition for undergraduates is well more than 45 times igher than 800. The crisis really pronounce that effect and i think we have seen substantial increases in reliance on Student Loans. Secretary of education has noted that Student Loans became kind of the norm at a certain point. What else happened i think is important context and i think that we forget there is a lot of talk about the rescue of the Financial System due to gambling on wall street. But there is also a huge change in our federal student loan system, which was a law that essentially led to the Government Purchasing a huge amount of federal Student Loans. Most federal Student Loans before 2010 were originated by Financial Institutions stamped with a government guarantee. Now much of them are owned by the government and in 2010, the president got a law passed to essentially end this bank Subsidy Program and now when you borrow, its all directly through the department of education. All of this put together more borrowers. More students relying on pell grants, Student Loans combined with the government taking the unprecedented action really has in some ways created a lot of opportunities that the holocene makers and the Research Community are thinking about all of the different tools that can really be used to make mprovements to the system. I think that we are at a place where we need to keep helping people go to college but we need to remember that the macro environment as well as some poor erforming programs are leading to people, many people being in very high levels of distress. I cant tell you enough. What i would push you to remember is when somebody is delinquent on their Student Loans, it is often just one sign of a broader array of shocks happening in their life. Fighting to keep paying rent, struggling to make payments on their car loans, and thinking hrough that as an entire consumer about the trauma that they are managing is something we always have to keep in mind. That said, there is a lot policy being pursued to not only ddress the borrowers who are struggling but also to inoculate the broader structures hard to afford. A few of them i will mention. There is now new repayment plans. This is a broad expansion of affordable Loan Modifications and free payment plan that allow borrowers to pay a reasonable amount of income to manage those times of distress. My understanding is theres about 5000 people enrolling in that per day on average. We have to figure out how we can keep them in there and manage through that. There are new ways for borrowers to get out of default on their federal loans. Rules have been put into place allow borrowers to get back on their feet through loan rehabilitation and we need to make sure borrowers are not hiding and they know there are options for them. Of course there has been a lot of interest and activity on enhancements to student Loan Servicing. Student loan servicers are the companies that help collect payments and manage your loans. There is a lot of work to do to make that process work better. The president enacted a student aid bill of rights that called for a number of potential improvements to student Loan Servicing and that might be an important way. There is good work being done to help borrowers go through that process. Going forward, we have to think about how to inoculate future generations to not be deterred by low prices. A few of them, ending those bank subsidies for the old federal loan program created, money to invest in the pell grant program. A lot of people taking a look at the role of the creditor and tate oversight agencies. The collapse of Corinthian Colleges has raised a lot of questions about the role of how we do oversight and many of you might have heard of the administration gainful employment initiatives, which is essentially a Regulatory Framework to prevent schools from graduating or even not graduating students with unaffordable levels of debt. There is a broader conversations ll over. Society inside and outside washington about making Community College free or more affordable. I think i would encourage all of you as you think about this issue that there is not one initiative that will be a ureall. It is a series of tools to fight a discrete set of problems. Focusing on just College Affordability wont really fix issues for people struggling today. Ots of hard problems to tackle but Big Solutions are needed. Thank you very much for helping to frame this very complex and nuanced set of issues. They are of vital importance and i say that both from my perspective as a dean of a policy school and as a parent of two college students. There are many, many issues on the table. I will ask a couple of questions first to start things off but i encourage you to use the note cards for us to open things up to the audience participation. Perhaps the place to start is to more of a sense of just how worried should we be about this crisis anyway . You spoke about the Mortgage Loan crisis at the beginning of your remarks and certainly some have suggested that what is happening with Student Loans is a bubble that could be as concerning as the mortgage crisis was as we all well now. W worried should we be about whats happening with student oans and student debt . Coming from the view of someone who is more of a Financial Services practitioner, i have a very stringent definition in my mind of what a debt crisis is. Debt crisis like you see in europe or puerto rico a very different animal. It is where there is an immediate precipice upon which there will be some systemic change that will cause mast of mass devastation very, very quickly. The term bubble denotes an economic term that something will pop and be quick and dramatic. I do not think what were seeing in Student Loans is one that will create rapid, Systemic Risk because there is really not close interconnectedness with big Financial Institutions that could reverberate through the economy. That being said, those are technical terms. There are many people in our country and that it is a ersonal crisis for them that they cannot manage this debt. I will say i totally respect what sue has a shared with the data but i wonder, are some of the borrowers who dont borrow very much but are in default, are they actually in the debt on a lot of other instruments . Did they finance their education in other ways that may not show up in the student loan data . How i would answer that is maybe its not a doomsday that we thought with the collapse of some of the large Financial Institutions but on a personal level, i think we have to ask ourselves how can somebody who defaults on a student loan really recover and become someone who can participate in the economy and not be discouraged and frankly not to feel like a failure. I dont want to debate over the word about what the status is but i think we can all agree theres so much we can improve for individual borrowers and we need to know more about what the potential impacts are on the rest of the economy. There may not be something immediately by there is more to learn there. Ms. Dynarski i agree with everything you just said. A bubble emerges when an asset can get flipped over and over again and its pricing gets inflated. Think of the tulip crisis in holland, think of a house that gets flipped in the price inflates. You cannot flip human capital. You cannot get the same kind of crazy inflationary. What we do have is a lot of suffering. Wanted to make some concrete observations about what it means when we have 8 Million People in default. What does that actually mean for individual lives . For someone in default, they have an enormous blot on their credit record. What does that mean . Any landlords now do credit checks before somebody can rent so they are shut out of parts of the housing market. If they want to buy a car to get to work because they are living in a neighborhood that is not where the jobs are, they are shut out of getting a reasonably priced loan for their car and they have to get an 18 to 25 Interest Rate loan which further presses on their finances. Many employers now check credit records. They will miss out on job opportunities. Of course add to that the psychological stress of someone calling your cell phone or your home phone, your relatives on a daily basis to harass you about your debt. So there is a lot of suffering and that is bad. That is what the crisis is. We had people who went to school to improve themselves at our encouragement. We provided a lot of subsidies and told people the right thing to do was improve your self in school. As a result, they are suffering and its a manmade crisis. That is what i think of as the student debt crisis. In terms of the magnitude, the mortgage crisis at the peak, the lending was the magnitude of the dead was close to two thirds of u. S. Gdp. Magnitude is not at that level, correct . R. Chopa there is approximately 14 trillion outstanding mortgage debt. In the subprime mortgage lending context, there was a set of risky features as part of those loans that led to the some otential cataclysmic events. A lot of counterparty transactions, derivatives and other sorts of instruments tied to that. There was in fact a subprime private student loan market that really blossomed in the years of subprime mortgage lending. Most of the lending that is occurring is in the federal loan market where fortunately people have access to these income driven repayment plans. I think that understanding how the Mortgage Market unraveled is important but there are also important differences and i think one of the important lessons is looking at servicing. How in my old role we regulated both mortgage servicers and student loan servicers. I was quite struck particularly with the private student loan servicers at the same type of deficiencies. Servicing is a tough business but when it goes wrong for a borrower, it can really be quite devastating and it can lead to some suffering. I really encourage that there is a lot of interest in doing more to improve that piece of the puzzle. Host it sounds like both of you actually agree that this is not in the realm of the mortgage crisis in that sense. However, perhaps in addition to concerns about the impact on individuals, there are broader Economic Impacts in terms of economic growth. Certainly some of the things you are suggesting, each of you, pointed to the fact there are other consequences we should be worry about. I wonder if each of you can comment on that before we shift gears to a different depemmings. Dememmings. Ms. Dynarski on that front, there is one fact i didnt explicitly put out there which is that the people who had the largest loans are the least likely to default on their loans. It is a straightline relationship where the smallest loans are the ones most likely to default. The narrative tends to be loan debt is going up. It is 1 trillion, one . 2 rillion. Defaults are going up. It must be that one leads to the other. The fact is the debt most likely to default are like 5,000. These are not the numbers we think of when we say people now cant get married and cant buy homes because of this debt. People who have the most debt are the people who are currently the winners and our society, people who graduate with a ba, masters degrees. They are the only people whose earnings have been growing steadily for the past ecade. Earnings of others folks have been dropping or flat. These low skill, low income folks with fairly small debts who are suffering but they have other debts as well. So we have a very large group of people who have terrible employment prospects. We dont have a sufficient afety net. Their problems are the important ones. The student debt may have been the needle that broke the camels back. Its not the burden that is causing the main problem. Mr. Chopa though i think your analysis is right on who is hitting the default but i think there are reasonable people love asked questions. The extent to which people are graduating with higher levels of debt even if they are not defaulting, many of those graduates may actually be located in metro areas where costofliving, rent has gone up quite a bit. Query as to whether are they paying higher student loan payments, higher in rent, maybe not actually experiencing a huge amount of wage growth and theres that interaction, which we dont know too much about, does that have an impact on their ability to hit some of the other milestones, some of the survey data of Public Opinion suggests having a lot of student debt might change the way people think about saving for a down payment, buying a home. We dont really know the specifics of it and i think as you have mentioned so many times, having better data about student debtors will help us really understand their problems but i agree, i think mostly about the people who have defaulted. Kind of like i think about the people not too far from here where there were very high levels of foreclosures. People need to recognize that yes, crisis from an economic term, maybe its not there. Ut what happened to people and therefore closed and they lost their homes and happens to people when they defaults from his personal tragedy and dealing with that is something we have to tackle. Ms. Dynarski every dollar someone is putting into a student loan is a dollar they annot use to save. In that sense, it all has to add up in some way. The new york fed among others have been sort of developing, putting on a narrative that really pushed the idea that loans were reducing homeownership rates, for example. From this newer data that we have, more and more poor people are taking out loans. You see among most people who have loans, the homeownership is oing down. People who never could afford homes are now appearing in the ranks of student loan borrowers. The people who always used to borrow, that go to the elite schools, their rates have not changed. It is a shift in the composition of the borrowers that includes a lot of people as opposed to the impact of the student loan on peoples home owning. This data has given us a much clearer picture about what is oing on. We have a good snapshot now of what happened from the late 1990s to the present. How are we going to make sure that we keep seeing this information as time goes on. Mr. Chopa part of the things many of my colleagues and i are thinking about are how can we be more transparent about the release of Data Information . Rankly the College Scorecard which includes a i encourage anybody who is interested in meditation to look at the education, student loan policy, to look at the College Scorecard. It actually gives you a much more detailed view not only about debt, but also about earnings. That is really the two sides of the equation that can help us think about what is the next level of analysis beyond, not donnel i go to college, but where do i go and where will that pay off . You are right that there is an increasing need to make Data Available and that scorecard was a big piece of that and i think weve will do more. Host i am always happy to contribute to the plug for the importance of data but the importance of helping people understand what the data are telling them so that they can you know, can influence their own decisions in those ways. A number of your comments have really highlighted the interactions among dimensions of peoples lives. The interactions among the different groups who are participating in the loan markets is part of that complexity. In addition to student borrowers and various lenders, we have the colleges and the universities. Some have said, and i believe there is actually research, including by the fed, that finds that as availability of student aid in Student Loans went up, colleges simply raise their prices. Hat may be a kind of challenging dimension and i would like to hear from each of you your views about whether that is simply how things would unfold. Support for the student aid went up and universities and colleges simply raise their prices so that simply doesnt help us address the challenge. Mr. Chopa i am not ultrafamiliar with the literature on it but my understanding is there is some disagreement and a mixed view about whether the impact of additional aid and loans on the rice of college. I will say though that it is important to remember that the published tuition and fees out there is not actually what a substantial portion of lower income people pay. I think with more aid, the net price for several years now has actually stabilized among many sectors of Higher Education. I dont know the answer to it but its obviously one that you ould want to know. But i want to make sure its clear that what is really the nswer, we have to tailor the program so they meet the policy goals and the policy goal is for people to be able to go to college and advance ahead. I think it goes to the question of the importance of research and analysis is just increasing every single day. Frankly, when you release more information, new questions arise. Ms. Dynarski my read of the evidence on this at this point is that forprofit colleges indeed raise their prices when grant aid and loans go up. They Sticker Price. They dont give their own aid to people. Their Sticker Price is their net price. Theyre not giving scholarships to people and their prices do go up when aid gets more generous. 80 of students attend Public Institutions. At those institutions, what drives price . How much the states are giving to them. If you look at how much Public Institutions are spending per tudent, it is pretty flat. What has changed is less of the money is coming from the states and more is coming from the students. It looks like cost is going up but its who pays for it is now the students rather than the state taxpayers. There is some evidence that schools that provide their own scholarships when the pell grant goes up will scale back on their scholarships and ship them to other people who arent eligible. The main action appears to be in the forprofits. Host thank you. Let me shift gears just a little bit. Each of you have proposals for policy Options Limited in order to address some of the aspects of the student loan crisis. You have mentioned the incomedriven repayment plans and those allow borrowers to repay in installments and over longer time periods. There have been proposals and susan, you have been want to propose this, of a management repayment plan through payroll withholding and i would like to ask each of you how much of the problem do those kinds of policies really fix . Mr. Chopa i personally think hat in a world where borrowers can pay a percentage of their income, it is not a cureall to College Affordability and student debt but its an important weapon that a borrower can use to fight delinquency and default and avoid it by getting an affordable payment. I think thats a pretty good weapon and i want to make sure that for anybody who you think a struggling about it, they should know about that and its important they are able to easily able to enroll and reenroll each and every year. There have been some the president has directed the agencies to look into multiyear certification of incomedriven repayment plans. For the purpose of tackling delinquency, it is pretty powerful and i urge people to figure out are they learning about it and give ideas about how to improve. Are there service is telling them about it . If they are not, we need to fix that. Ms. Dynarski the very fact we have seven Million People in default and the ranks continue to grow indicates that the system of income contingent loan repayment programs we have is not working. None of those people should be defaulting. If they are very low income, 18,000 a year, for example, they basically wouldnt be paying at all. It comes back to where the rubber hits the road. How do we actually implement these programs. And servicing sounds like such a boring topic. Loan servicing. Oring. How do you work with borrowers to get them into a program that works for them . The issue came up with the mortgages. There is a big push for the Mortgage Companies to restructure loans. Restructure the mortgages so people would have more reasonable payment plans and where it fell apart was the implementation of it, getting the servicers to actually do it. That is happening right now as well. I think the big problem is the department of education owns this in norms portfolio of loans. Its essentially one of the biggest banks in the country. Its not a financial organization. Its very good at getting people to college and that is what it should be doing. It should not be in the business of servicing a trillion dollar ortfolio of loans. I dont think i want the de to turn into an organization whose focus is collecting money from people. I think this business should be moving out of the department of education. What do you think of that . [laughter] mr. Chopa well [laughter] mr. Chopa i will say though hat the issues of engaging borrowers and getting the incentives right is hard. Especially when using private firms. There will be their own economic incentives. Also, i would add that borrowers the process to walk through that, many borrowers need that individualized counseling that i think sometimes is just hard to deliver. Many Companies May not be set up to do that. I dont really know what the right answer is. Ms. Dynarski they are not paid to do it. They have a contract with the department of education and if its not paying them enough for the time that it takes to walk someone through an enrollment in an incomebased program, that the contracting failure. Mr. Chopa what we saw in the Mortgage Market was that many of those services working for other Financial Institutions or rusts. It did not work so well. So figuring out related to your point about payroll deduction, maybe there are ways to streamline the repayment issues and i know you have done some work on automating how that ight work. Those are all concepts that we have to really think about. What i want to make sure, though, is very clear, is when a borrower is having a tough time on their Student Loans, there may actually be bigger issues they are dealing with financially speaking that might have more immediate consequences. For example, getting there car repossessed or making rent. We always have to remember that once people are in trouble, its like a treadmill that sometimes gets faster and faster and faster. So figuring out how to deal with all of these mini explosions in your life is hard and that is hy getting those repayment plans clear and that people know about it and can easily enroll in it ms. Dynarski even if we had my eam of a universal based ased payroll progressive system, it would not deal with fraud. If there institutions out there that are selling a product, charging people tuition, getting them to take out loans, but not actually educating them, that will not get fixed by this. The regulation of the forprofit college will not be fixed by there being an incomebased program. Politics is is the back end about how we make sure people are getting the education they are paying for. That is a separate issue that cannot be dealt with by ncomeissued repayments. Mr. Chopa just today, the ftc and the department of education took enforcement action related o the devry. Of course you are right. Those repayment plans wont solve it. I guess the other thing i think is important to remember, there is he sense that everyone would with Student Loans is having a tough time. I actually think that is not true. For many people who graduate, make good money, sign up for auto debit on their loans, they have a good experience with repaying. Ms. Dynarski it makes me very happy to pay my loan every month. [laughter] mr. Chopa the sense that they feel like they know what to do whereas i think when people are really struggling, thats where it really gets tough. Host we are now ready to go to the audience. The first question is actually from twitter. Weve actually had a nice segue to it. We have been talking a lot about the repayment approaches and mentioned that that is not going to fix everything. This question is is it possible o produce guidelines such as borrow no more than ex dollars if you are getting a degree in a particular field or getting an Associates Degree . What are your views about that . [laughter] mr. Chopa i went first to last time. Ms. Dynarski we essentially do have some of that in that we have annual limits for undergraduates. We have some caps on it. We dont have caps on other loans such as the parent plus oan. Pretty much, parents can borrow the entire contribution that the formula says they are supposed to be making and that has been causing lots of problems. Itto with gradplus loans. Should we do that . And would government to do it . I think it would be great if student to better information about what the payoff is to say a degree in education or social ork or in fine arts that would guide them in how much they would borrow for that degree. On average, its worth it to borrow to go to medical school and not so much for some other degree. Is the government going to do that . I think that is kind of what the College Scorecard is intended to do. If the government ever going to have a hard caps . You are getting a degree in animation, not going to lend to you. I dont see it happening. We dont have that degree of regulation in our country. I can see an informal advising system trying to get that information. Do i think we could have major by major, school by school loan limits . I dont see it happening. Mr. Chopa a lot of people answer this three rules of thumb about you should roughly not borrow more than this. I think the challenge about doing that when it comes to a degree type bachelors versus associates there are significant variations in earnings within those degree types. This is just my own quick thinking. When it comes to volkswagenal training certificates, where there is a pretty clear understanding about the type of job you might earn afterward, im sorry, the salary you might earn based on that occupation, it may be simpler to come up with what is that right amount to borrow so that it is comfortable to afort. I think when it comes to a number of undergraduates, particularly fouryear bachelor degree, we have to acknowledge so many people dont really know what kind of profession they will pursue several years later. There are huge complications in developing rules of thumb or regulating it. Host the second question. This is a question related to ata. That is what does the data had and what is the impact related do the hbcus . Mr. Chopa i dont have that off the top of my head but my understanding is that some of the survey data suggests that minorities, particularly africanamericans, borrow at higher rates and more. The percentage of people borrowing and the average level of borrowing is higher. That being said, my understanding is there is not a similar framework like there is for mortgages where we have much more granular information on how much people are borrowing and low level data by race, ethnicity, and some other. As i understand, that is not in the facile. Ms. Dynarski there is a long history of racial redlining and so forth and because of that, there are requirements that race is included in mortgage applications. The data i was describing to you that gave all the insight that comes from the department of education has on Student Loans, which includes the fasfa. If you remember filling that out, there is no room for race. What you can say is you can try o piece it together. The facts are that if you look at who attends forprofit institutions, Community College, disproportionately students will be nonwhite. Those populations also have much lower wealth levels. For a given level of income, if you compare an africanamerican family and a white family, the africanamerican family will have lower wealth. For a given level of income san francisco, you compare the africanamerican family and the white family, the africanamerican family will have lower wealth because wealth is something that builds over several generations. Your parent but your parents parents to have had good income for many years for you to end up with wealth and not have it seized and appropriated in the institutionalized ways it has been in the u. S. Mr. Chopa we know there is disparities, according to some of the government data, on what College Graduates who are minorities are earning per hour after college versus their what counterparts. There is a lot of next are there that raises some serious questions about how do we look at this in a way if we believe education is a vehicle to social mobility. Host clearly, more work to be done to understand those gaps. Ith the failure of corinthian, what is the role of the government shutting down institutions versus letting the market take care of poor erforming schools . Mr. Chopa when i was at the cftb, i was heavily involved in a lawsuit against corinthian which alleged a number of misconduct related to their private loans. Obviously, they had shut down. I think it has raised some questions about how does oversight in Higher Education ork . This is actually the history of oversight in Higher Education, referred to as the triad where the federal government of the federal government, the creditors, and states all play a role in doing so and i think there have been some legitimate questions asked about corinthian being a credited to the very end and what is the appropriate role of each. Part of what i am working on is thinking about, what is the appropriate role of the state and protecting consumers from those closures . I think you are actually asking me a different question about the market closing. You know, there are schools that do fail. Own whatever it may be, financial mismanagement, not being able to provide programs. But i do worry that there are some programs that particularly thee there might not be transparency we would like and honesty and how they represent the programs to their students. To livethem may be able longer than the market would typically allow if the students about what the truth that program was going to deliver. Bit think it is a inaccurate. If you have a image in your mind of the College Industry as being this competitive private market, you are wrong. Incomet 90 of their from a student aid programs through loans from the government and from grants from the government. There is something called the 9010 rule, which meet institutions cannot get more than 90 of their income from the student aid program. Before profits tend to be right at that margin and then they can get more money from people getting benefits. That doesnt count in of the that doesnt count in the 9010 rule. This is one of the ways we regulate the forprofits but the idea that somehow Market Forces are going to compete them out of existence, i dont think is accurate. D as a wayrule is use to make sure no institution is completely living off of student aid, but it is a fairly weak regulatory tool. Mr. Chopa one of the things that i have been closely following for years is we cannot deny the fact that there are a number of people post 9 11 who have returned from service and have a generous, and appropriately deserved g. I. Bill. Because what you said about the 9010 role, the 90 is only related to student a programs that are part of title iv of the Higher Education act but a money from the g. I. Bill and other militaryrelated programs, they do not count. The Obama Administration has actually supported closing that loophole because it is, i think targeting of those and the less thing we want to do is have someone use the benefits on a program that will not help them get ahead. After world war ii, the g. I. Bill was actually a key instrument of transitioning those from service into productive civilian life. Many people believe it was part of the engine of growing the economy, of getting people in jobs that pay. I think we have to fix that. Host ok. It is virtually impossible to student loan debts through bankruptcy. Doesnt that make the situation worse than the mortgage crisis in some ways . What are your thoughts about that set of challenges . Mr. Chopra the main area i have worked on into the student loan context as a relates to bankruptcy is the 2005 change, which treated private Student Loans like federal Student Loans. It is worth noting that federal Student Loans do have income driven repayment, which is a chapter 13 style repayment plan, but private loans do not have that. A study published by the department of education a few years ago shows that a change in the Bankruptcy Code did not lead to lower prices, nor did it lead to expanded access to loans. So, because of that, it probably did not meet its intended goal and it is something that needs to be really looked at again, as to whether it was an appropriate change. I will say though, i think bankruptcy is very wellknown, it is not dischargeable. Way, am not sure if in any and a talked before about a single issue. Issue cureall. I dont think it is a solution for what is going on because many particularly young people, even if they could file would not because of some of the other effects it would have on the credit. When it comes to the federal Student Loans, i would like to see that people really are able to get into those programs that help them avoid delinquency. Ms. Dynarski if you lose your job and your earnings stop as a result, your Mortgage Company is not going to say because you are not earning much, no payments. You can do that with the Student Loans by getting into one of the incomedriven programs. The reason and rationale behind them not being dischargeable in bankruptcy, say you have a good year five or 10 years later and at some point, you could be doing fine. And as a society, you want to make sure that people who are doing fine are contributing, so they can be helping other people get access to college, right . The idea is we have a pool of money that comes from people when it works out, let them contribute their money and the form of taxes and that loan payments and that gets recycled, pay it forward to the next generation to educate them. I would not want to see people doing these strategic bankruptcies. How many times has donald trump been in bankruptcy, right . It is just a mechanism for the next deal. They want to make sure that people are paying their fair share toward the commonwealth. So, this question also from the audience, follows up the susan on the comments you are making about how you want to encourage people to move forward into Higher Education in ways that really improve their opportunities for the future. The question here is, how do we prevent students from over borrowing without discouraging students from enrolling in college in ways that improve their economic future. That is a delicate balancing act. What are your thoughts about ways to get it right . Ms. Dynarski for the students that i express the most concerned about, the traditional access point for first generations didnts, lowincome students, it has been Public Institutions. The way we protected students from there he high risk and making the bet on college is making them cheap. We keep Public College cheats of people do not have to go into debt. They can afford to experiment. If it does not work out they are not left with a big hangover in terms of debt they cannot afford later on. Even Public Colleges have become a more risky place to go to college because you have to end up having to borrow some. Returning to Community College as being an essentially free access point for education, i think that is an important way to make sure that low income, firstgeneration folks can experiment with college. It is not going to fix everything. There are still going to be people going to private institutions, forprofit institutions who are going to borrow. We still have to be thinking about how do we deal with repayment, how do we make a well functioning loan system . But having a vibrant, cheap low functioning Community College system is one way that we keep that promise. Mr. Chopra to be clear, the completing or not going to Community College and not working out is not as grays as if you borrowed a lot for a different type of school. In some ways, it provides a little risk gateway for people to not borrow much, but also frankly, get that credential and maybe if they dont pursue further studies, they are still able to get that wage increase. Ms. Dynarski one dynamic we saw during the recession was people were pouring back into school. They wanted to go back to Community Colleges. They were being underfunded and they are oversubscribed. People cannot get into classes they want to take. They cant get into the Nursing Program they want to. And the forprofits took advantage of that. We have strong evidence that when committee colleges are underfunded, forprofits rise. That is a manmade problem and it could be undone. The next time we have a recession or another event that pushes people into school, if we have an expanded capacity at the Community College, the thing is going to happen all over again. The University System is compared to systems in our counterparts in other industrial countries, and frankly the u. S. Is a wealthier country that some of those countries which have not faced the types of repayment challenges, crisis that the u. S. Is grappling with. What are the lessons, are there lessons, that we should be drawing from those experiences in terms of financing post secondary education . Mr. Chopra i have not studied the International Comparisons , but perhaps my illinformed feel is that i think most of those differences and borrowing and financing is simply because college as a percentage of Family Income is dramatically lower in other countries. From my understanding, there is also many industrialized countries, particularly in continental europe, have universities that are essentially federally funded in ways that keep tuition very, very affordable. Though, i do know in some anglo shift hasthat this changed quite a bit. I do not know the exact answer , but it is possible the simple answer may explain a lot of it. Ms. Dynarski there is another piece as well. The u. S. s post secondary system is just the land of Second Chances and third chances. If you did not do well in high school, you can go to a Community College. And maybe eventually, you will be able to go to a university. In germany and france, there is restricted access to the universities. So, based on how you are performing in middle school, you will go to a high school that prepares you or does not prepare you for university. And the share of people going to university is much lower. I was meeting, along with other the higherm Education Group and we went to england and we were talking to our counterparts there. Their Graduation Rates were astoundingly high because they restrict the share of people who can go to the universities. The best events can go and they go on and graduate. It is a less risky proposition for the government to invest in them, but it also means be are not taking a risk on the same number of people. So that is the other structural side. Opportunityle the to take a risk, but then replace all the risk on them. And if it goes badly, what we are hearing is, it was very badly. And if we want to let people provident, we need to pr more in a way of insurance against things going badly. One way to do that is to make it free. If you do not end up with a strong seller, you just do not pay. That is but a well structured, well functioning incomebased repayment system would do. The next question is, how much of the problem is just that the Interest Rates charged on the Student Loans are just too high . Elizabeth warren has proposed making Student Loans at much lower percentage rates. What do you think . Mr. Chopra i understand that 2012 or something, the rates were fixed at i believe generally, 6. 8 was a very common Interest Rate. Loans new federal student are tied to market conditions. So, rates today for loans that you are taking out are much lower. Now, look, their Interest Rates are set by congress. If Congress Wants to lower the rates or increase the rates, that is their prerogative. For many people, interest accrual is a substantial part of what they repay. For those who are struggling default, in many ways they are not even close to paying the interest portion, but ever getting near the principal portion. So, i dont know. It is one of the many issues about loan repayment, but as it relates to the default issue, i am not sure that it is directly related, but i think many people have made the argument and the Interest Rates during the Obama Administration. They did go down when Congress Passed a law. People felt that was a more fair outcome to be tied to the broader Interest Rate environment. Ms. Dynarski i would say that lowering Interest Rates cuts costs for borrowers. That is undeniable. Does it deal with default in a targeted way . No. You are taking a subsidy somebody is in distress right now and you are saying, ok, over the next 10 years i am going to reduce your payment by 20 a month. That is not the most targeted way to help someone who is struggling right now with their repayments. If someone has a debt of 20,000 and you charge them 6. 5 versus 4 , it will make a difference of 25 a month. It is going to benefit everybody, including the people who have 100,000 in debt and are earning good money. They will get the benefit of that Interest Rate cut as well so it is not targeted in the sense that it does not get money to people when they are struggling. Nor does it get the money to the people who need it the most. A lot of the money ends up going to people who are doing just fine. That is my main concern about using that as a tool to reduce the payments. It is not targeted. Mr. Chopra it reduces the total amount you pay over the life of the loan, which, people want. [laughter] ms. Dynarski it makes people happier to pay less for things. Again, another controversial economic principle. [laughter] unfortunately, this will be our last question and it is a different type of option to really address this broader challenge. If we are worried about access to college and see Student Loans as an obstacle, one not make college free . Yes, taxes will increase, but wouldnt we be better off as a society . Mr. Chopra i think that is why there is an effort to essentially make Community College available and free, or near free, to be that gateway, given that if we believe as a society that getting that credential is critical for that persons future. That is part of it. Now, i think you always have to think about the distributional effects of how you make it free and who you make it free for, but there is no question that the increase in College Tuition has been something that feels like a real impediment to so ahead andle to get they feel like they are putting a lot on the line and risking it. And there is really no other option for them because going to college is the way to ensure in some ways, against poverty for many people in the labor force. So, it is tough dealing with college costs. It is very personal to people because they felt like they wer ble to go to school at you always your people saying 40 years ago it was only 800 here. When you go to school if feels like such a gateway to your life, of how you chart out a your career. Not only does it give you more earnings, but it gives you more ability with what you choose to pursue. I think it is so important, forh i ding economists rcommoditizing College Education as a ticket to higher wages. It actually shapes a lot of us as we are as citizens. Ms. Dynarski it is a wharton mba saying this. [laughter] mr. Chopra i do feel that though. I feel it is more than just purchasing some it is not like buying a factory that produces a certain amount of widgets. It is about who we are as people and the citizens too. I certainly want susan to weigh in on this, but i will push you a little bit. If i call out one of the things you said at the beginning of your spots, i think it was that you would answer no, we should not make college free because of the distributional aspect. Chopra i dont know about that. For people with a lower income, the cost should not be an impediment. And againld ask i am on the Financial Services side with making college free combat the expense of limiting the ability for people to go . Would it lead to lower pehl grants . What is the tradeoff . In actual policymaking, those are things you have to thiknk about. What are you losing by doing that . I hate to give it back to this data driven approach to figure out the right intervention to meet all sorts of goals. In isk the world we live not just philosophical. It is also about implementing and figuring out cost and benefits. Ms. Dynarski historically, u. S. Community college was free. In the 1960s and 1970s the tuition was very minimal. We departed from the history. States disinvested. Should we make all of the fouryear colleges free . That would be extremely expensive and poorly targeted. Community colleges are were firstgeneration students and low income students go. That would be a way to target resources. Most neede who education as a form of economic mobility. Unfortunately, we are out of time. I am sorry we did not get to all of the questions, but i do want to thank all of you for coming and participating by offering such a wide, varied range of questions to our panelists. I would like to thank our panelists for a very informative and wide ranging set of perspectives. Please join me in thanking both of them for their comments. [applause] ms. Dynarski thank you. Up next on cspan, politicians and Community Leaders talk about race the u. S. In topics on this mornings washington journal, include trade policy and this weeks nuclear summit. Washington journal his life at 7 00 is wife at 7 00 a. M. Eastern. Theack lew will discuss role of economic sanctions and talk about some of the previous challenges and successes. We will have his marks from the Carnegie Endowment for International Peace this morning 45 a. M. Eastern on cspan 2. The president of turkey will be in washington, addressing some of the security challenges facing his country. He will also discuss his goals for turkey. The Brookings Institution will the event and we will have that live at 12 30 eastern on thursday here on cspan. Now, a discussion on race in america. We will hear from the former mayor of philadelphia and a Yale University student activist. Plus, fox news analyst juan williams. Good morning. I am project director for the Aspen Institute. Neutraln institute, a nonprofit organization, aims to foster leadership based on instilling values. We are delighted that you have joined us for our sixth annuals in partnership with our friends at comcast corporation. This is symposium happens to be one of my personal favorites. Speakersible group of , a great dialogue. Does the get any better than that . I do think so. We start the day with an opening presentation, followed by two panel sessions. Then we will go into our town hall conversation. The town hold the town hall be a chance for all of the participants and attendees to dig into the topics and themes discussed throughout the day. For those who are joining the conversation at home, we encourage you to join the discussion on social media. The hashtage for the event is stateofrace. I will now turn this over to charlie firestone. [applause] firestone this symposium will explore the opportunities and challenges for people of color in the 21st century. This year we will look at questions regarding race on campus and on changing demographics in cities and how they affect minorities qualityoflife. Consider how the country made progress on the racial front. We will also examine why similar race related problems persist, and in fact, have intensified in the last year and try to identify a cause of hope that can emerge from this new, multiracial reality. Plagued thise country since its colonial times for over 300 years. Weve struggled at the time of the adoption of the constitution, during the civil war, during jim crow and the Civil Rights Era and still today. There has been progress on the way of course, but we still face a significant racial issues deal withwe must these issues if our democracy is to survive. Today the dialogue will touch on individual and structural causes of racial problems, looking towards new and viable solutions. We will be defining these problems for the purpose of finding a solution. What you, we, and institutionalists can do to remove racial tensions. In other words, the purpose of this convening is to do with providing a safe, nonideological space to have an informed and educated dialogue on the toughest issues of the day. Get into our session, we want to have a few thank yous. First of all, kiana herself. She has a shepherded this project for all six years of it. She has done all of the hard work of putting it together. We also want to thank juan williams, who was the instigator of this session more than six years ago. He came to the Aspen Institute with the idea. Ourlso want to thank partners in this venture, without home it would not have been possible at all. And the wonderful folks at comcast for putting brett jackie blunt , and more. Work undere folks the capable leadership of a man who was created a huge civic portfolio, as well as a business one. One who believes in true Racial Equity and puts his name and resources behind that. Please will come to stage comcast executive vice president. [applause]
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