On Numbers and Private Lending
When analysts seek raw data on student loans, they choose from NCES surveys like NPSAS or IPEDS. The acronyms hardly matter. NPSAS-type surveys follow individuals across a fixed time-frame, often a decade, and rely entirely on responses to brusque questionnaires probing the intimate realm of one’s income, finances, and family. Small shock that typical questions have more than 30% non-response. And in a self-reported slice of triumph and ruin, spanning years of individuals’ lives, which sort do you think don’t respond?
Now, a survey like IPEDS depends on the data volunteered by institutions. There are fewer interesting questions (most are broad) and far fewer missing variables; and more, much of the data can be (or even has been) independently verified. But the data is banal on loans. IPEDS will condense grant aid results a dozen ways, and it looks comprehensive, but after loan aid it isn’t. The numbers reflect known federal aid packages, excluding PLUS loans. The school doesn’t know about private loans.
Stephen Burd, of the New America Foundation, said as much in a NY Times article last year:
“We find it very alarming. Colleges may not be aware the students are taking out the loans, so there is nobody giving any guidance.”
In fact, universities haven’t a clue. How could they? NPSAS-type surveys have scant data on private lending, a recent craze, and what data exists is prohibitively riddled with problems. The IPEDS class says nothing.
Perhaps we should look at student loan markets and volume?
An Institute for Higher Education study claims over $16 billion in private student loans for the 2005-06 year, compared to nearly $69 billion in federal. That puts private lending at almost 19% of total volume. Projected growth rates are notoriously unreliable but see federal loans at 8% and private loans at 25% for the year just passed. This report found real scandals too. Most alarming? More than 20% of all private student loan borrowers do not receive any federal Stafford loans. And among independent private loan borrowers who actually used their federal loans, nearly half received less than their maximum allocated amount. In another area, IHEP notes that private lenders have been marketing to students before they have filled out the sprawling but crucial FAFSA, the official application for federal aid. Seems many are skipping it.
So please: do not underestimate the threat of private loans for students.
Students lack equal information and guidance, and yet all must assess a dizzying array of rates. So they make mistakes. They trust too quickly, or sign out of weariness, or fail to discern a lender’s deceit. Ask yourself, without numbers, but knowing the interests involved: how can this not be happening?
Anecdotes say it happens. New studies agree. And now, waiting on “government data,” are we not like those victims of high-interest loans, hearing no money down, and pay nothing for now ? Oh but then.
Filed under: Private Student Loans, Statistics | Leave a Comment
Tags: Federal Stafford Loans, Federal Student Loans, IPEDS, NCES, NPSAS, Private Student Loans
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