 So thank you all for coming out. We're going to talk about some focus group research that New America recently commissioned and finished and wrote a paper up on. And we titled the paper, Why Student Loans Are Different. And just to get some things out of the way, if you're following us on Twitter, the hashtag is different debt. And the paper page, if you want to read the actual paper, is at edcentral.org slash student loans are different. So I'm Jason Delisle. I'm the director of the Federal Education Budget Project here at New America. And I'm the lead author on the paper. And my co-author is Alexander Holt, who's a policy analyst here at New America. And he's up front. And so if there are questions that he's better suited to answer than I am, I'll point to him. And so he may stand up and talk at that point. So we've pulled together a great panel of experts and practitioners in the field of student loans, student loan repayment, to get a good conversation going about what we found in the focus group paper and the research that we did. So I'll introduce them really quickly before I go into some of the top line themes we found in the work. All the way on the end is Beth Akers. She is a fellow at Brookings Institution's Brown Center on Education Policy. She's written a lot about student loans, particularly on debt to income ratios, most recently and controversially, and also on whether or not people completely understand how much debt they have. And next is Kevin Fudge. He is a manager of government relations and community affairs at American Student Assistance, which is a student loan guarantee agency and a nonprofit organization that helps promote college access and successful education debt management for students. And Adela Solis, did I pronounce it right? Okay, good. Is an advanced doctoral student at Harvard's Graduate School of Education. She studies policies that impact access to and success in higher education for low income and minority students. And she's done some work recently on students working during college and also on loan aversion and debt aversion. So it'll be interesting to hear her take on what we found in this work. So let me just walk you through what we did, this sort of project that we did. We commissioned six focus groups in six cities around the country, so six total. And we brought together people who have student loans and have indicated in self-indicated in a number of ways that they had sort of struggled to repay or use some sort of benefit in the program to help them better manage their payments. We had a really good mix of borrowers. You can sort of, I think it's in the last page of the paper, it will give you a better breakdown of who they were, but the for-profit colleges, not-for-profit colleges, older students, older borrowers, younger borrowers. So I think we pretty much so run the gamut. I will say though that we did take measures to exclude people who had attended graduate school. If you don't know my whole spiel about the way we talk about student debt, I'm a big stickler for making sure that we distinguish whether or not we're talking about undergraduates or graduate students, because the issues are very different there. So in this case, we excluded the graduate students. And I should point out that New America itself did not run the focus groups or we didn't do any of the recruiting. We hired a firm called FDR Group in New York to do it for us, and they also used marketing firms to locate people. Although somebody from New America did attend to each one of the focus groups in person. So our goals in this work were, we wanted to sort of fill in some of the blanks that we think we have in the discussion around student loans and student loan policy. I think in Washington and in the policy space we talk a lot about the terms and benefits of the program on paper, and we look at them on paper and we think of them in terms of on paper and spreadsheet, but there's not a lot of great information and we certainly need more of it on what that actually means then for borrowers, how they interact with those terms and is the program and are the benefits that are meant for them actually working for them. So this is very much so exploratory work. This is not a survey. And if at any point in the conversation I slip and I make a sort of pronouncement about what we found in the paper that sounds like I'm talking about a survey, forgive me. We've all found here at New America. It's very hard to talk about qualitative research as if it's not a survey. So again, we were sort of looking, how does the student loan program, the federal student loan program, actually work for borrowers and actually work for struggling borrowers and trying to sort of surface ideas and look for things that the current debate is missing, at least from the borrower's perspective. So, oh, and I should also make one other comment. When I talk about some of the things that the borrower said, it may sound like I'm implying that this is very intentionalized behavior and well thought out, but that is almost always not the case. So forgive me if it sounds like I'm talking about borrowers who are sort of have well thought out plans when they make all of these decisions. So one of the first findings and most interesting findings in the paper, the title of the paper is why student loans are different. So that's a theme that's gonna run through this constantly. And one of the big ones is that people are surprised by their monthly payments. We heard this over and over and over again. And which, you know, you might just hear this and not think much about it, but that's actually a really unusual thing for a loan. There are very few types of loans, if any, where borrowers take out the loan and somehow don't know the monthly payment. But that's actually exactly how student loans work. And it's sort of the nature of borrowing for college. You're going to take multiple loans per semester. You may borrow more one semester than another. You can borrow for your cost of living. So it's not necessarily just tuition. Your financial aid package may change from year to year, causing you to borrow more. And the interest accrues while you're in school. And in some cases you may not be making payments for five or six years. And there aren't many loans like that out there either. So that when it comes time to pay, borrowers have either lost track of what they should owe or it was too difficult to figure that out. And then the payment comes and they say, oh, I sort of, I had, for some reason, I had $100 in mind and it says it's $250. So this is sort of an interesting thing. And I think it's worth exploring more and thinking about does it have to work that way? Maybe it does. Are there ways to sort of mitigate this issue? Another thing along the themes of student loans are different is federal loans come sort of loaded with options to postpone making payments after you've left school. These are benefits like forbearance and deferment. And borrowers use them a lot. We have statistics on showing that forbearance is probably the highest level of student loans and repayments ever been. And again, this lets borrowers suspend payments or qualify for very, very low payments. Interest generally does accrue while borrowers are using these benefits, which was very interesting because we heard borrowers using the benefits and sort of knowing that the loan was getting bigger, but then also sort of surprised that what the resulting monthly payment was. It's also interesting, and I think this is lost on many people who think about these policies, how easy it is to get a forbearance. There really isn't paperwork. There isn't a form necessarily to fill out. It is actually just a phone call. And oftentimes what's happening is that borrowers miss payments and the loan servicer contacts them, and they offer them a forbearance right there over the phone and they agree to it. And I think I've already mentioned this, that you can use forbearance for up to about three years. You could also use deferment for three years. Some cases you could combine both and go six years without making a payment while the interest on your loan grows. And we got the sense from the people in the focus group that they were using these benefits for very long periods of time. This was not a one month or two month type of use of the benefit. Another theme was low priority payments. So people look at student loan payments and student monthly payment they need to make very differently than other bills that they need to pay each month and even other kinds of loans. And some were sort of almost surprisingly hyper-rational about this. So we heard borrowers say, well look, I've got a credit card too. And if I'm late on that payment, they jack up the interest rate to like 30%. On my student loan, if I miss a payment, the interest rate stays the same. And so they would just sort of look at us in the focus group and say, which one would you pay first? Makes perfect sense. And here again, we have this sort of the benefits of the loan, Congress wanting to not penalize people for late payments, but it actually makes people sort of prefer to defer the loan. We also heard borrowers say that they resented student loans in a way that they didn't their other debt, which then made them more inclined to postpone paying. They resented it because they didn't think that they got much out of the education. Or in some cases that the service was in the past, so that the actual payment in their mind had was no longer really connected to whatever it was that they bought. Even if they were sort of okay with the quality of the education they got. So it was sort of the payment would show up and they're like, well, what is that for? And there were some people who were actually, we had a lot of lines like paying your student loan is like throwing money into a well. And we sort of thought about that. It's interesting because when you make a payment towards your home or rent or cell phone or car, there is this strong connection as to what it is you're getting when you make that payment. And we got the sense that that was sort of missing when it comes to student loans. One of the harder things to listen to in this was to talk about hopelessness, about ever paying down the debt. So it's another big theme where people would say that the balance is still growing even though they're making payment. Where the balance on the loan is now twice what they originally borrowed. Or that in order to make monthly payments, they're now going to be paying affordable payments, they're going to be paying for 25 years. And when you know how the federal loan program works, again, unlike other loan programs, that makes perfect sense that the balance grows. We have things like income-based repayment where you don't even have to make the accruing interest payment each month so the balance does grow. Some people are having default penalties added where the balance is immediately increased by 25% when you default on your loan. And there's others that some, we did some investigating on this as well that when your loan goes into collections and then you try to get back onto payment, the collection agency actually takes 20% of that payment before crediting your loan. And you can sort of see how someone can feel like they're not making progress than on paying down the loan. So this was a theme and lastly, I'll say something about income-based repayment and then we'll turn it over to the panelists here. Income-based repayment, again, on paper is sort of Washington's sort of silver bullet for dealing with all the student loan ales. And we could not, for the life of us, explain what income-based repayment is to the borrowers and the groups. We tried again and again and we tried to hone the moderator's script and there was just a lot of confusion. There were a few people who were using income-based repayment among the 59 people we talked to but most were not, the vast majority were not and had never heard of it. Things we heard were like, well, 10% of your income sounds really high. And of course it's not 10% of your income because there's an exemption, but we tried to explain that and it was a disaster as you could imagine. And telling people who can't afford their loan or don't like their loan that, oh, don't worry, these payments will be based on your income for 20 years. They were sort of like, well, I don't understand, how does that help me? I've been talking about 20 years. Also some people were worried that, well, if my income goes up and my payments go up and I'm gonna be really mad about that. So some of them really, many of them sort of failed to see what the benefit was of income-based repayment. So those are some, there were some other things in the paper and you should take a look at them and they may come up in the conversation but I did wanna get our sort of experts' reaction to what we found and what we wrote about. So Beth, do you wanna talk about it? Everyone's looking at Beth, do you wanna start? You're on the end? Sure thing. I do have prepared questions, so. Well, I can talk all day, but you let me know when stuff. So first of all, thank you for the work. I think it's a fantastic contribution. It's different from the nature of a lot of the work that I've been doing on these questions about the student loan crisis because it presents, I think, a more subtle or nuanced story than the data can really tell. So Jason mentioned some work that I had done where the most controversial statistic was the median payment-to-income ratio for borrowers with student loan debt and as it turns out, that is not the end of the story when it comes to thinking about what policies should be doing about student loan debt. Not to suggest that I was naive to think that previously, but it's important that we start to understand the nuance of what's happening in this market at this really, the micro level. So I think that the work like this work and work like this is valuable because it can contribute to those discussions. As Jason said, it's not a survey and so we can't take away more from it than we should. We need to recognize the limitations of doing focus groups and doing work of this nature. And what we can take away from this, I think, are some extremely valuable conversations about directions to go and research, directions to go and policy. And it really just presents some ideas into the discussion that were not previously there. So just as the payment-to-income ratio for the median household is an important statistic to contribute to a broader discussion, all of these ideas and comments are important to bring to the table. So I applaud them for doing this work. Something that I'll point out two quick things I thought were striking to me from the work. So first, and Jason, I think, mentioned this in his intro as well, is that what we're seeing in these comments, taken one at a time might seem like, well, that's kind of some irresponsible behavior. That's something that you could take away from reading one of the reactions of the students to the question. And by definition, it is, right? They're made a decision and maybe regret having to take responsibility for it later on. But what was striking to me was that when you collect these comments altogether, it's clear that the problem is not irresponsible, naive behavior, or even the fact that people are making these decisions without enough information. It reveals that there is a systemic problem that's resulting in this extreme anger among a certain population of the people who are taking on debt. And maybe that's not the whole population and maybe it's even a small fraction of the population. But to me, that's a very serious problem. And the striking thing about it is that it's coming from the system. And so we want to think about what's causing that, where is that, where can policy play a role in that? Second, this is not a sense of entitlement that's being reflected in these comments because what was mentioned in a few of them was that students, sorry, these aren't students, these are borrowers, are very happy to pay their bills for things like Netflix and cable and things that they recognize have value to them. And I don't mean to criticize that they're recognizing the value in these things and that they're not recognizing the value and the payments that they're making on their student loans. So I have no idea why that's the case. I think we really need to understand that better to move away from a place where we have a lot of students who are feeling this way and talking this way about student loan debt. So those were a couple ideas that were striking to me and I'll stop talking now. Great, thanks. I think for Kevin, what would be really interesting is that you're talking to a lot of borrowers and you've been doing that for a long time now. I mean, is this what you hear too? Yeah, I think a lot of what's in the report sort of validates what people who've been in practice on the ground have been seeing for years and it's always great to have, whether or not it's statistically significant or what we can draw from it, it's always great to have the voice of the people that are actually affected by the policies that are being discussed in the halls of power. So there's value in that by itself. I would say building on what Beth had said about the question of responsibility versus irresponsibility. One of the things I found very interesting about the whole report is just drawing parallels to the idea of alternate views of economic theory. So like behavioral economics versus classical economics. And thinking that as of today, so there are more, think about it, there are more payday lending, pawn shops and auto title places in the United States combined than there are McDonald's, Target and Starbucks. So it's not just student, yes we are focusing on student loans but if you look at it as a product of a larger challenge in that context than the idea of, well I'm gonna prioritize this payment versus that payment or here's how I'm going to finance my future by using these types of loans. I mean it's not just payday lending isn't just restricted to low income communities and military installations, it's expanded and what does that mean? And so it's taking it back directly to student loans. I've worked with people who have said you know what, I'm in default, here's my situation but my tax return is being offset. So they're taking out a sizable chunk of that, it's gonna happen anyway. So why don't I just use that to satisfy my student loan payments and then just not think about it for the rest of the year. Wage garnishment may not be an issue when there's volatility and there's not steady employment in certain cases. So the other thing I would say when it becomes to kind of like behavioral economics is the idea that people are paying more and they feel that they're getting the idea of value. So they did this, there was this really interesting study about giving people $10 wine and saying it was $90 wine and actually measured, I'm not gonna, so I'm not a biologist and I don't play on TV so I can't tell you the exact portion of the brain that actually measured all the activity but they showed how there's a biological response when people were told they're drinking $90 wine and it was only like two buck chuck, 10 buck chuck for a wine in a box. And so when people, now is the time people are making decisions about where they're gonna go to school. People are getting acceptance letters in the mail, I myself have seen a lot of acceptance letters unfortunately with huge gaps in financial aid packages, schools cost 50, 53, $55,000 and the award is like 30, it's like great, that's a lot of money, but you have a $20,000 gap. And the attitude is more like, okay, well, how do we make this happen? Versus, well, what are the long-term implications of taking on this debt? And so part of the conversation is it's a continuum, it's looking at it prior to people enrolling, when they enroll, after they enroll and making sure they have the information necessary at the time to make the decisions but not being overwhelmed because as you pointed out with income based repayment, when you start to break it down and show how complex it is, then it becomes almost like analysis paralysis and therefore no decision by default which then leads to those consequences. So I could talk about income based repayment, that was sort of the piece of this paper that stuck with me the most, perhaps because, I mean in a way you sort of frame it as they're not being a finding around income based repayment and the finding that students don't understand income based repayment is not surprising but I was really interested in learning more about how you did sort of iterate through and try to reframe the language like what you did exactly to try to help students understand it better because even though there might be structural issues with income based repayment, sort of as Beth pointed out, there are systemic problems. There are always gonna be information interventions that people are coming up with to try to resolve those issues. So I mean sort of given that that's where we are, we have to figure that out. And that ties directly into some research that I'm doing with Angela Boatman and Brent Evans at Vanderbilt University. We are looking at the existence of loan aversion worse, serving a bunch of high school students to try to determine it's really sort of the opposite question to what Jason and Alex have been looking at. We're concerned that there might be students who are not borrowing and so not accessing higher education or not persisting. But ultimately what we're planning to do, assuming that we find loan aversion is an information intervention, probably specifically around the IBR. So I mean, we're gonna try to start grappling with that problem of how you explain to high school students what the income based repayment program is, so. Yeah. It actually struck me that one of the problems with income based repayment is actually what we think is it's sort of most novel feature, which is, well, I can't tell you what your monthly payment is gonna be. It's just gonna be an affordable share of your income. That's different for everybody. But people want, they want nominal numbers. So they were sort of like, well, and you can't tell them. You can't, well like, what are we talking? $100 a month or $200 a month? And then you end up in this percentage of income. And you know, we have to walk back from the 10%, it's not really 10%. It might be 2% or 4%, based on the exemption. You just get into the weeds right away. And so we tried to go with, well, how about less information? How about we give them less information about them and try, about income based repayment and say, well, it will be an affordable share of your income. And so they became very suspicious of this, where they would say, well, like what? You know, what does that mean to you? And what, that might mean something different to me. And so we realized, well, that's not, that's not getting us anywhere either. So, you know, it was a, it was, it was pretty difficult. And you know, some of the student loan servicers in the collection agencies have mentioned to me, and this made, you know, I thought about this in a very different way. What we experienced in these focus groups, now mind you, we had paid these people $100 each to come and talk to us for a couple of hours. So they were very, you know, they were in a good mindset. They wanted to talk, they had snacks, they had a hundred bucks. They were willing to try to figure out what, yeah, what are you talking about with income-based repayment? Now imagine someone who is defaulted on their loan and the collection agency has been calling them every day for a week. And they finally decide to pick up the phone. And this collection, I mean, this conversation, the explanation of income-based repayment is not going to go well. The borrower is not gonna be really receptive to the details. And also, I should point out, in order to use income-based repayment after you've defaulted on your federal student loan, you first have to make a series of payments that aren't based on your income necessarily and then transition to income-based repayment. So it's a little bit of a, again, it's great on paper, but when you hear about how it works for borrowers. Well, do you think taking IVR a default, especially what somebody has defaulted on their loans? What do you think? Do you think that's a viable policy solution? So I think some of this goes to the best comment that that is sort of assuming that they have defaulted because the payment is too high relative to their income. And I don't know that that's the case, considering all of the other explanations of sort of default that we have in here, like resentment, it was a $10,000 loan and now it's $30,000. And I don't wanna pay based on my income or anything else for 20 years because I didn't borrow that much. So I don't know what the, and I think there are some pretty big sort of technical hurdles and administrative hurdles to just automatically enrolling somebody in that. I think that that would be difficult. Most people who are defaulting are defaulting on very low loan balances. And so IVR may not actually even lower their payment. Yeah, in my experience, I found that in working with nonprofits that specifically target low to middle income families and help them economically empower and begin on their feet, they're actually averse to recommending people utilize IVR because of the long-term costs associated with the growing interest, even if you have the discharge or forgiveness option. And I remember I was puzzled because it was one of those train the trainer presentations where you're explaining the new rules and regulations regarding student loans, doing case studies and scenarios and a woman shot up her hand, she's like, this is completely antithetical to what we tell our clients. And I was like, really? I'm sorry, because I thought that this was actually somewhat helpful. I mean, I can see why you would say that, but then I went back to the drawing board and so for the next time I went there, I had this pyramid based off of Maslow's Hierarch of Needs. And I was like, okay, right. You're focused on food, shelter and these basic needs. And even if you have this tool in IVR to help with the student loan, you're looking at how this negatively impacts all these other things. So let's... And you're saying the negatively impacts in that the balance grows and you're gonna pay more in interest overall or pay for a long time? Correct. I think it's just looking at, but it's put to your point about in the paper, people are looking at the 20 years versus my point is that just because you sign up for IVR, doesn't mean you have to do it forever. It could be like the form of a forbearance, a temporary adjustment until you get to a place where a standard of payment would be more feasible. So we run into this problem too when we were talking about IVR, because you mentioned 20 years, that's when the forgiveness happens. The people here, I pay for 20 years, right? So income-based repayment is you pay based on your income, you may pay off your loan in 10 years, you may pay it off in 12. If you haven't paid by 20, then it's forgiven, but they hear 20. And people think that you're making them pay for 20 years. So it's interesting to hear you say that. So those are hurdles. I think that's a big hurdle for the programs to get people out there. Go ahead Beth. I'll come back to the theme of student loans that are different. And maybe I'm reading between the lines too much, but I guess that's what we all do here. I'll interpret it in our own way. But what seemed to me is that there was a comfort that the individuals that you talked to had with these other financial obligations that they had, whether it's their Netflix account, their car payment, their mortgage, these things. And the sense I got was that there was a recognition of the safety valve in those cases. If I don't have money for my Netflix, I can cancel that. I can get rid of my cable bill. If I crash my car and it's total, it gives me no more value, I stop making payments on it because insurance comes in. And there seemed to be a clear distinction to me that that safety valve either is not there or it's not perceived to be there by the people who you were talking to. And that is the difference, right? Right. But what you were seeing though is that this, now we did partially screen people in who had said they'd use forbearance. But people were finding their way to forbearance as this way to just make the payments stop. And I think one of the things that really came out of this for me doing this work was I wanna know a lot more about the forbearance benefit in the student loan program. Who's using it? How long do they use it for? Again, cause interest accrues on the loan during this time. So you imagine someone who has a 10 years repayment plan, they postpone payments cause they were unaffordable or they thought they were too much and I'll figure that out later. They use forbearance for a year or two. Whatever wasn't an affordable payment two years ago just got larger on account of using forbearance. So just the discussion about it and the way the borrowers talked about it. You know, I really wanna, you know, and also forbearance just lead to default like that. So in terms of doing focus group work to like generate questions about what data I think we really should try to get from the Department of Education or the Department of Education should put out is are people using forbearance and they're just balances growing and then they default on a larger balance. Which I think, you know, did you get maybe a question for you three? Did you get the sense that this sort of this leniency, I don't know if there's not really a better term for it in the loan program, is it hurts people? Your paper uses such a specific sample, which I think is really interesting but thinking about, I mean, forbearance and deferment more broadly. I think if you had a big national data source, which maybe Beth knows what a big national data source would be that would identify that. I think that, I don't know, I would hypothesize that you wouldn't find the patterns replicated that you see in this particular qualitative sample that you have. So you would think that if we were to get data on forbearances, we would see that people are actually using it the way we expect. On average. On average. But forbearance is really, I mean, but do you think we should have tighter limits to it? I mean, three years seems like a long, that seems like a sort of dangerously long time to let somebody not make any payments on the loan. Do you, or I mean, it sort of made me rethink, like is this, and there's information in here as well that I thought really countered the view in Washington that consequences for not repaying your loan or being in default are really swift and severe. The borrowers made it sound like things were dragged out over much longer periods of time. So my question for you guys is, do you think that's really what's happening? Particularly Kevin, because you're talking to a lot of these people day to day. And also, you know, is there, is that bad that we actually let this drag out? Would it be almost better as somebody actually used the phrase the other day for failing fast as opposed to letting the sort of problems drag out and fester? I'll go first, then Kevin can tell you the real answer. But you know what I think it reflects, I don't think we can sit here and say what the appropriate duration of forbearance should be. We haven't thought deeply about that question. But what I think we know is that we need a more robust, coherent, simple program of safety nets for federal student lending. And so what you're seeing is cobbling together of this forbearance, which was designed for one reason, probably being used for a different reason in a lot of cases. And then trying to connect that with income-based repayment and just sort of junks up the process is my guess. And so what should it be? I'm not quite sure, but I know it should be part of a comprehensive system of a safety net for federal lending. Yeah, I would just say in my experience, as I say this diplomatically, the servicers, or the people who hold the loan are the one with the knowledge about the process tend to be in a more advantageous position than the person who has them. I'm trying to say this very diplomatically. So just bear with me, please. When you're done, I will. I'll loosely translate for me. I'll say what you really want to say. Great. And I say that because it really highlights, I guess, the difference between servicing and counseling. Like if you call a servicer to get assistance, they're a volume business, right? It's how many calls can I get rid of in my time here and I need to churn through these as quickly as possible. What's the easiest thing that I can do if somebody's experiencing difficulty repaying their loan? Tell them about forbearance, okay? Then it kicks the can down the road, then you feel good that you did your job, the person feel good that they don't have to pay, everybody's happy, and then check back with us in 12 months, 24 months, 36 months, right? But when you counsel somebody about their options and you actually take, instead of having 20 calls in an hour, maybe you have three, but you're spending 20 minutes with each person going over the pros and cons of each of their options relative to their situation, their scenario, talking about if they wanna go to school, down the road, if they have a family, et cetera, building out all these options, and that's a much more comprehensive approach and my argument would be if that was the case, on a much broader scale, you would see people taking advantage of different options other than just doing that because they felt that they had nothing. And so as the conversations shift in the city about how we're gonna implement financial literacy, what does that mean? Or I would just argue that there needs to be a focus on the difference between servicing the loan and loan counseling and putting more effort into building up the counseling. And I always use apples as an analogy of customer service. I have a personal shop there, but people who don't even like shoes just wanna call the 800 number just to talk to somebody friendly. I don't wanna buy shoes, but I heard your customer service is legendary and just sit on the phone. But I mean, it's that idea that, yes, there is a myriad of options, but when you take the time and you don't just put somebody in it because it's convenient, then you would see different results. And I don't know, it's always difficult to say what is going to be statistically significant because I think, I don't wanna say numbers can lie, but numbers can be a little misleading when you look at the statistic a lot of people throw out is, well, there's not really a student loan crisis because less than 10% of the population has debt higher than $40,000. But if you look at it, one of the analogies I tried to make is like with the windshield and the heat index. I mean, it can be 98 degrees outside, but if you have relative humidity of 70%, it can feel like 122. So in other words, lower lower balances may not seem like a big deal from like a policy perspective or just casual observer, but to that person who might be low income or has these other financial responsibilities, that burden actually feels more than it appears. And so I think, in my opinion, and the evidence would show a lot of times the quickest and easiest solution isn't always the best, but it's the one that they're steered towards because of the incentives on this end, on the servicer end of the lending contract. Sure, and so you're saying sort of steered towards doing forbearance rather than what? Rather than, I don't know, deferment, like thinking about how to pay what the standard repayment would be. You know, now there's public service loan forgiveness, loan consolidation, graduate repayment, I don't know, there's options. And you know, I just, it's very difficult to see how something can be crafted and designed in great theory and you see the unintended consequence of what happens on the ground. I think the time that it takes in between when the policy is implemented and when you realize what's actually happening and understand those unintended consequences and do your best to remedy them is it's not like lightning quick, like not to get into the culture wars, but like Indiana where something happens, let's pump the brakes on that and then turn it around. Like, you know, and when it comes to these types of issues, it's important for work like this to show what's happening on the ground level and people's responses to these policies and sort of use that as input and how you craft future ones. What do you think would need to happen in order for the level of counseling that you're sort of advocating for to start happening? That's a very good question. What do I think would have to happen? Well, I guess I've condensed my job title to a 15 second elevator speech, like what do you do, Kevin? I work to deflate the student loan bubble, right? So I guess if it popped, then maybe there would be some renowned emphasis on counseling, but I think if organizations that already do it, such as ours, provide evidence that it actually works and get more buy-in from our state legislature and then our Commonwealth can be an example for other states, then hopefully get some momentum that way, but ultimately it's gonna come down to people having their voices heard and really informing policy makers what's happening. So we had a section in the paper where we were sort of skeptical that this is a counseling information problem. It didn't really strike us that people were ending up in the situations that they were in because there was something that they really didn't understand about the loan program. And to a certain extent you heard people when they were sort of clamoring for more information, what it sounded like to me, and I guess this sounds a little bit harsh, was it turned out that this thing that I did was actually risky and it turned out to not go so well and I would have really liked to have known how it turned out before I made my decision, which isn't more information, but it's sort of more information about how the future will turn out. But I mean I'm wondering for the three of you, you know, if you saw this as an information problem and if you could sort of specifically what, what would we provide that would sort of change things here or what is the information problem for these individuals, do you think? Or you can speak more broadly about the loan program in general. I'll answer that. So I actually am less pessimistic than you, for once maybe. I think that, I think it's not just the information about the future outcome, which is sort of the pessimistic view, right? That they recognize the upfront costs but are just uncertain about the future, which is just natural and we can't ever resolve that, right? I think it's actually more of a solvable problem than that and just to bring in some data points from my recent paper with Matt Chingos at Brookings, what we found is that when you ask students in their first year of study how much debt they have and how much they're paying to go to college, they have absolutely no idea. So the statistic is that only half of these first year freshmen that we looked at, sorry, among this set of, this national representative sample of first year full-time freshmen, about half significantly underestimated the debt that they had taken on thus far. So this is within less than nine months from having signed their first promissory note and they just have no idea how much debt they've taken on, so they have uncertainty about the future and I'm sure everyone would have liked to have that resolved up front, but they still don't even know the other side of that equation or how much the investment is that they're making. So to me, that's a solvable problem and then information about the risk is something we can address too but that's sort of secondary. I almost think it's a rebranding effort versus giving more detailed information. For example, when high schools have their financial aid nights, I go out and speak to parents and students and one of the things I found that's been resonating is two things. Well, first of all, saying that this is a business decision. I want to help you become wise consumers so that you understand you're purchasing something, a product and you want to get a good return on the investment. But another thing that I found myself saying is that we rule number one as a parent is keep your kids safe and we can conceptualize that by, I'm gonna take your keys, you don't go to that party, out at that site, at 2 a.m. and all these other scenarios about personal safety and so what I've tried to do is say, let's look at this as, how do you keep your kids financially safe? How do we expand the definition of personal safety so that you protect their short-term financial interests and long-term financial interests? I know, by the way, yours, that you're not borrowing from your retirement or refinancing your house to pay for this investment and it's like the light goes off and it's like, oh, yeah. Well, if you put it in those terms, then perhaps maybe the choice to invest X amount in this particular school may not be the wisest. Maybe it's, if we're ultimately looking at this is going to be a credential to help me get a job later on down the road, perhaps there's a different way to do it and I close and just say, where your son or daughter goes to school is not a reflection of how well of a job you did as a parent. I think a lot of parents would sort of see that as like their capstone project or their senior thesis, where their kid gets to go slapping a bumper sticker on and say, yes, this is validation, I did an excellent job and particularly in the Northeast where it's very, very competitive at elite institutions and even non-elite institutions that can be sort of competitive, right? And so there's this idea that it's this personal reflection but if you say, okay, let's expand the definition of personal financial safety and let's not view this as sort of like this validation or rubber stamp on a job well done and start from that as your baseline then the parent who I saw two nights ago who's looking at me with three different financial aid letters all from schools that are like $50,000 fine institutions but have gaped them by $25,000 would rethink and say, well, perhaps we should take a year off. Maybe I'll look at Middlesex Community College which is an hour from my house and I mean from also I would say too from the school's perspectives, one thing that I find interesting is how they operate as businesses sort of maybe counterintuitive to what is best for the consumer which I guess is obvious, right? They're a business, they have their principles, they have their goals and objectives but one of the things I found interesting is the schools that require students to live on campus their first year. Like why should that be mandatory? If a family wants to save money by commuting and it's feasible for them, like you shouldn't require a student to therefore pay $13,000 or $14,000 a room of board to live on campus, I mean, especially if it's an urban school, you're trying to create a campus community in a larger city and it really doesn't make much sense. But this is what Kevin Kerry is finding with his book about the end of college. People like, they seed the academic quality argument right away, oh yeah, yeah, academic, so you can do that anywhere, but the community which is sort of like, are we all, is everybody in the United States just agree that college isn't about academics? All right, so my point is that information is a part of it, but I think it's a whole rebranding of what are you expecting out of this? Understanding that this is a consumer decision. You are making a purchase. And for many people, again, I can't stress this enough, this is the first time they're paying for school ever. If you're paying taxes, you're going to public school, the idea of paying for college, it's all a foreign concept, like you think about it, you know it in your head maybe if you're a parent and you went, but the landscape was miles different back then, miles and it's changed exponentially and so that would probably help towards I think the information challenge. I can't resist talking about the community issue that you guys were just discussing. I mean there is research that shows that building communities like that does help with persistence and part of the issue with these students repaying their loans is the persistence issue if they don't persist to degree that makes them more frustrated with their repayment. So I don't think we can totally discount the community idea but more to the point I totally agree with what Kevin was saying about framing and that a lot of these issues that you bring up in your paper are framing issue and I was particularly thinking about that with the point that you bring up that students were low prioritizing these loan payments which I think was kind of possibly the most striking finding for me in your paper and that could definitely be a framing issue. Definitely, I mean Beth was kind of saying this before as well. What it is, why it is that you have to keep making these payments even though you're not receiving a service is definitely a framing problem. Yeah and you know it's funny when they said that and I actually, I thought of it as well I finished graduate school a long time ago and I can tell you there are definitely months where that 200 bucks comes out of my checking account and I'm like, what is that again? Oh, that, yeah, that was a long time ago. So I mean I even, and I know better, right? Like you know, so I can certainly see how there's definitely a different attitude toward it. So, but do you think, you know you all talked a lot about the sort of information on the sort of front end, on sort of preventing, right? Like making sure people end up with, you know, but we spent a lot of time talking about talking to people who had already made those decisions and we were talking about sort of managing their loans. So I just wanted to make sure, I mean, was there something in the, is there an information problem there? You know, it struck us as people intuitively understood the choices that they were making around, okay I get it, interest is gonna accumulate, and if I pay for longer, I pay more interest, but I get a lower payment, they kind of got all that in abstraction, but then were really caught off guard when the specifics hit them, right? Like, oh, I didn't realize it was that much interest or I didn't realize the payment was going to be that much. But is that, you know, I sort of, I'm kind of on the side of the loan servicers as well, where we've got umpteen options and how do you walk through all of those for somebody on the phone, you know, with a calculator and they have to answer a whole bunch of questions, and I mean, to me that just seems like a really, it seems like yes, it's a big information problem because Congress has created it by saying, well, there are 14 different options that you could choose from, and also this issue of trying to find the right plan for me, the student, which I think is just, to me seems like we're asking really a lot of loan servicing at that point. Well, it's, if you think about it like this, like a borrower making, you know, 10 calls over three months versus one or two and feeling more confident in their ability to make decisions and discern among the different information that they're getting. So it's not counseling for the sake of talking longer just to say that you had a longer conversation, but it's hopefully planting seeds and giving people confidence that yes, you can manage this and here are the tools to do it. And so it's less of a calling a servicer every time you get something in the mail and talking to somebody different and hearing different things and not really being clear and still being vague and in the fog versus having a comprehensive dialogue and in theory having more confidence in your ability to manage that because ultimately that's what it is. It's going to be debt management. The horse is off the barn. There's not gonna be an influx of new free money to lower their cost of college. If financing at higher ed is the way that things are going, the obvious solution is to help people manage that and to understand that managing it effectively so that you don't experience any of those adverse circumstances. Some people will make that trade-off and they'll say, you know what, it's all right, I'm just gonna ignore this, I have other priorities and deal with that, but it's not counseling for the sake of continuing that it's eventually they're able to do it on their own. That's the goal. But maybe there should be fewer options so the counselor doesn't have to be or doesn't have to be so much counseling. I would not argue with that. I think there's a case to be made for having fewer options or. But I think your point though about what you mentioned or I want to come back to this mentioned earlier about the sort of collection agencies, right? So a lot of these people are actually in many cases they're dealing with collections agencies not loan servicers, right? Loan servicer first, you get into really big trouble, you make a lot of late payments and now you've got, you're dealing with a different entity to collection agency who you alluded to, Kevin, has lots of information about what they might offer you, what they can offer you, what they can offer you, but doesn't wanna show their cards because this is debt collection now, we're not servicing a student loan anymore. And I actually think that that's actually a place where there is an information problem where this is, we've got a loan that looks like, this is a government program and you've got a collection agency that is, so it's sort of, is it a government program or are we collecting debts and it can't quite decide which one we want it to be and so when you're collecting debts, you don't tell people what they're, you try to get as much money on them as you can. But I bet they didn't know that they could actually negotiate down the interest and by how much. So that to me strikes me as an area where we do have an information problem but it's one that just stems from treating these like a debt collection rather than a government program so that people don't, but what this would mean though is like you said it though, fewer options probably, less flexibility, fewer options. Well one of the, I would say add to that the particular challenge I ran into a few months ago because I hold office hours at our state house every month and work with state representatives on behalf of their constituents or for the representatives themselves. And yes, I can tell you some stories. Don't let them know. Yeah, I'm not gonna go right there. But a young woman actually came to me because she went online to do what she thought was consolidation for the purposes of public service law forgiveness. Turned out to be a fly by night, well maybe not fly by night, but an organization in California that does it for $400, something that you can do for free with an online application or through your servicer but they charge $400. Now there's a lot of places like this and some of them will say, big disclaimer on the front of the webpage, this is something you can do for free. We are not affiliated with the federal government. And they have that and they say, oh and by the way, here are our services. But there's others that there's no indication whatsoever. It's like debt consolidation, federal debt consolidation. It makes you think it's official. So my point is when you don't provide the information or there's not that clarity, there's a vacuum which people can come in and say, you know what, this is where you're a trusted neutral third party source that will do this for you. And the downside of it is what happened is they went into her, not gonna name the name, servicing account and set it up for her. But then when I tried to go in and say, you know what, we need to change her password and figure all this out, I got locked out. And she doesn't know, they set it, since they set it up for her, she didn't know her own login and password. And it's like, wait, how does that happen? You know what I mean? I mean, it's just, you know, but that's just another aspect of it, of how this is confusing for the person that's all they're trying to do is simply make payments. And it turned out that the $200 that they had taken out of her account for two months didn't go towards her monthly payment. It went to the organization as part of the fee for service to help her get into this public service loan forgiveness and new income-driven payment plan. So. Anything that you guys wanna add? Otherwise I'll throw it to the audience if they have some questions or comments. I'll just pile on to the case for I guess a more simple system. And I think what we know or think we know about people's decision-making processes that folks don't wanna go through a math problem and do a statistical optimization to make every decision in their life and in practice, what they do is they use a rule of thumb to make a decision. Very smart people, when you talk to them about buying a house, buying their first house, they think, well, you know, they stay. If you're gonna stay there three years, it's worth it, if not, don't buy, right? I mean, these things are totally ingrained. And so, if we want people to make good decisions, the system needs to be simple enough that we can develop rules of thumb so that you can talk to your neighbor about the decisions that they made and that information that they used can also be applicable to your own situation. So. Yeah, and I heard Kevin say earlier though that some of these rules of thumb are actually impediments, right? So we've all been taught that, well, the longer you pay for, the more interest. And so better to pay shorter, right? So this, as you're trying to tell people about the benefits of income-based repayment, they go to that rule of thumb, like, well, wait, I don't understand, I'm gonna pay more overall. I find that a lot with a lot of the sort of, when you're dealing with loans, and Alex Holt and I talk about this a lot, where we make these things look less and less like loans, which actually, I think, sometimes makes it harder for people to understand what they actually are and what the terms are. So it's sort of the goal is, we're gonna give everybody loans, and then we're gonna create lots of terms so they look as little like loans as possible. And then we'll ask them to sort of sort out what they think is best. So we've talked for quite a while, and I wanted to see if we have any questions or actually comments from people in the audience. I know normally there's a lot of disdain for people in Washington who stand up at these events and make a lot of comments rather than questions. But I think in this case, we've got a pretty small group, and we also, the nature of this work was a focus group. It's not a definitive answer to these questions, and it actually probably raises more questions than it answers, and so if there are people out there that actually wanna fill in some of those blanks, I think that's perfectly fine in this kind of setting. But do not, yeah, give people an inch. I'm post-secondary education in the US House. And could you please say your name? My name is Roberta Stanley, and I work for the State of Michigan Department of Ed. So I've kind of been on both ends, and I can say this now because I don't have any real affiliation right now. The elephant in the room is the proprietary schools who have run up the student loan debt and not produce graduates with skill sets or ability to get jobs, but I think that we need to deal with this more proactively because when you sign up for the military, it's a contract, and you know you have to serve so long that a whole lot of young people when they sign up for loan programs don't understand that this is a contract as well and how serious it is. I think we need to do a better job on the front end of explaining this to students applying, both for college and universities and whatever, community colleges, and also as they sign these papers for these student loan programs because I think they're young and they have no idea, and their families may not have any loan debt or may never have been able to pay back a loan depending on what kind of background they come from. So I think it's wise that we're a little more proactive on the front end. And we also need to hold some of these institutions more accountable. Thank you. You have any reaction to that? I mean, there were students who attended for Robert colleges that participated in the focus groups. They were not the majority of the people who participated, but we did hear from them and we got feedback from them. So we weren't necessarily missing that. But there were also people who were saying, another theme in this was that these loans are very easy to get. And there was a theme in this focus group that federal student loans are very easy to get. So it is very easy to qualify for a student loan. In fact, there are no requirements to qualify for a federal student loan if you go to a school that accepts federal student aid and almost all of them do, you can get the loan and you literally just sign. And we asked the participants to sort of reflect on this and it wasn't necessarily just a for-profit issue. It was, wow, I can't believe something that can get me in that much trouble is sort of that easy. Well, it's interesting. We have a program at American Student Assistance called SALT, which helps teach financial competencies. And your point about the schools taking ownership or some responsibility to this, there's an example, the University of Maine, Presgyle, in implementing the program, it's a combination of having peer counseling and then the school encouraging students only to take what they need versus using your report. There was a gentleman who you could have, the loan limit was like $6,000 and the school was only like four, so he took an extra two. So over time, the evidence has shown how students with the counseling and with the SALT program in effect, students have taken less, they haven't taken the full amount that they're entitled to and in fact only borrowed what they need, which obviously reduces what they end up repaying in the end because as we all know, it costs money to borrow money. And so as more schools adopt those kinds of approaches and recognize, yes, they are businesses, but here is our, it's like corporations with their social responsibility. I mean, almost maybe institutions of higher ed take that for granted because they're serving college students or students in general who are trying to better themselves, they think it's by course, by nature, but in adopting that theory, hopefully that changes their actions so that they can encourage students, you don't, even though you can, doesn't mean you should and here's the impact of doing that. And to some of those 48, 50,000 to $60,000 schools in my region, I've spoken to several financial administrators, directors of financial aid who have said, part of our counseling is to tell people you can't afford it. Now, they're not gonna advertise that on their website and say, yeah, you know, our school costs this and if you get this, then you probably get, but they will say, it may be in your interest to look at these other options. They probably won't come out and say it like that because it's obviously not diplomatic, but I'm heartened to see that because rather than having it be dictated to them what they should do, like saying you can't offer a letter of acceptance, if you can't fund a student to this level, which may come down the road 15, 20 years from now and taking more of that ownership themselves, I think that's a great step. And an example of how, again, information and counseling on the ground level can be very effective. Are there others? Want to add something or ask a question? Okay, great. Clark Peters from the University of Missouri, I happen to be in town where a lot of these same issues came up at the NEKC Foundation, which is taking on this issue for vulnerable populations, child welfare populations, for example. And so what Kevin said, I just wanted to sort of emphasize how important that is that's understood because there is, the way the incentives line up, the schools get this benefit, right? The tuition's paid, they get another body and that's a tremendous, there's a tremendous amount of pressure for filling the seats right now, especially with the demographics following the way they are. So this problem's likely to get worse as schools struggle to gain more of that share of students. And when you say pressure for filling seats, are you talking about what kinds of institutions? Public mostly, but I think it goes to others as well. Grad school is a huge problem facing this too. And I think the struggle is, well, that's a whole different issue, but this is not gonna get easier, right? This is not gonna get, especially with the federal funding declining for state universities where I am, we're supporting the campus on tuition. So we need students. I think, a quick comment and then one question. The comment involves the, something again Kevin said, with regards to the predatory nature of the context these students face. Because it isn't just an information lack of understanding, they're getting lots of information from a lot of different sources. They're getting calls, this is a great deal, why don't you join up for this thing? We can, for 400 bucks. Now you're talking about the loan counseling or the loan. The loan counseling, there are people trying to separate young people from their money, especially when the loans are coming. So it isn't simply an information issue. It's that you're in a market of lots of other information sources and it's confusing and trust is a huge problem. My question is, with regards to financial counseling, but financial coaching, which is sort of something that's coming up and that's a sort of a softer role, really undefined, but counselors come in when there's a problem, when that debt collector comes in. Somebody who comes in earlier than that guides young people making good decisions, getting them employed, make sure they stay employed, make sure that they don't take on too many loans. What role do you think that will play in the future? So I would just say... It's a few counsel. I know, right? I actually, I don't anymore. I mean, everybody at counsel is like grandfathered in or people I just see randomly off to the street. Hey, aren't you that guy? No, I'm just kidding. One thing I actually thought, I thought of this on a plane coming down, is this is a year by year proposition, right? So I was reading a review in the report again and one of the things I thought was that if you were, I mean, granted, repayment doesn't happen until six months after you separate, but if there was a way to sort of mock repay after that first year of school and sort of give some context to, okay, you borrowed X amount, here's what it'll be when you graduate, here's what your first monthly payment is. I mean, send them like a voucher in the mail so you don't actually have to pay it, but to condition people to the idea that, okay, you're making another decision to continue and this is what's gonna cost you, not to make people run for the hills, but just to inject that awareness level so that you can bump up that number of people knowing what they owe. And it's very, it's really interesting because you don't just fall out of bed $80,000 in debt or $40,000 in debt, it's cumulative. It's over time, you're making decisions by semester. And one of the things I found interesting in my work and my observations is how people, particularly if they're applying to a four-year school, look at it like a long-term commitment. You know, like we're going to the altar, we're going to City Hall, putting our paperwork in and let's get married, you know, and we're thicker than, if we can afford it or not, we're gonna stick with it. And it's like, no, don't take that mentality to it and reassess. If it's not, I think the analogy I use was that there are many different, think of yourself as a South Station or Union Station here in D.C. There are many trains to get you to the same destination. So, if the one that you're on, you find that it's not working, then you need to get off and find another one. And again, in my experience and observation, people have a version to saying, well, I must have made the wrong choice. It's submitting, you made the wrong choice or it's not working out. It's hard to stomach if it's not affordable, even if your definition of affordable is, okay, let's try to make this work. So, having that, maybe it's, you know, a conversation with the financial aid office at the end of the year, how did this work out? You know, did you find that it was a strain if you're trying to pay some of that out of pocket? Like, and maybe you can limit borrowing by doing more of the tuition management programs that allow people to, as a tool, to pay more over a course of months versus having a one outlay or borrowing more. So, Adele, I keep hearing people talk about this old context here and that the subtext is, people are borrowing too much and they should be coached to borrow too little and I'm thinking about your work worried about loan aversion. I know, I saw the same way, Dave. So, tell us about the other side of the coin. Right, I mean, so we don't know that much about the other side of the coin yet. But I mean, the reason that we're doing the study that we're doing is because there have been previous studies that have shown that there is a loan aversion problem, particularly among ethnic minority students. And then, of course, now, I think there's a recent paper about that being connected to matching to the concern that students are going to their local community college because they're afraid to borrow to go to a more elite institution when they actually are students that should be going to that elite institution. So, I mean, the reason that's not part of this particular discussion today is because of the particular sample that you're looking at, so it makes sense. But ask me in a year and I'll tell you if it's a real thing. Right, because there's a lot of pushback on this. You know, Kevin, you talked about the college discouraging people from borrowing more and the sort of positive result you talked about measuring was that people were, in fact, borrowing less. And, you know, within the sort of education within the advocacy community and within the research community, there's as much interest in saying that, hey, there's people who aren't borrowing enough and should borrow more. And that's what I, you know, I sort of, it's a real struggle for me to figure out how someone then makes that calculation for somebody else. You know, about how much they should borrow more or less or what's the exact, the right amount. I mean, I thought it goes to like other pieces of the discussion we've had today, which is that, you know, while this is a really important story that you're telling, this is a story that a lot of people are experiencing, it's also true that, you know, this idea that people are $100,000 in debt is not true on average, you know. That's why we excluded, it's one reason why we made sure to exclude graduate students from this and also people with really high levels of debt. The levels of debt that people had in the study were very much so skewed in the, around the $20,000 or less. We had a few people with 50 and 60, but we were pretty careful not to get the $100,000. I mean, you know, as sympathetic as I am to them, I'm also the story of why they're struggling to repay is like not that interesting. There's really, I mean, borrow $100,000. Like the chances that that was going to go well were very, very slim. Well, it goes back to who do you blame for the mortgage crisis, the people that lent them the money or the people that took it. I mean, there's people that'll say, well, they shouldn't have taken them in the first place. And they have people who say, well, why would you lend to somebody who was such an obvious risk? That's right, this is why I make the point that this is why all of the people in the focus group, not all of them, but a very strong sentiment is, why is this so easy to get this money? I mean, there's no, again, there's no metric to say what is, what's too much? I mean, I did my best, Beth Aker's impression and did like a how much is too much debt study. You know, it didn't get published, obviously, but there's no, I mean, it's, it's inconclusive. Well, you used the same title. Did I really? No, hold on, when did you publish yours? Mine was in 2009. Oh, you went in. Okay, sure, I'm gonna say it. All right, never mind. I like to get points for originality, but there's no, it's difficult to measure. You can look at a particular example that's not of the average and say that a school that puts a $40,000 plus loan in a financial aid package to a family that makes less than $15,000 a year is problematic. But again, like the, just for that person to take that and see it to fruition, you're not seeing, we're not seeing the evidence of that. So that person having $120,000, $160,000 of debt, it's just not shown in the data. I would just push back slightly and say that so much of what we look at is your average debt of four year graduates or six year graduates. And we don't spend enough time on degreeless and debt. I know you guys did a little bit of debt to income ratio, but looking at all the other variables like cost of living index, wage stagnation. I mean, there's just a lot of factors that go into it. And I never wanna be in a position to tell somebody what they should or should not do. At the same time, we have consumer protections in this country for a reason. I don't wanna go to the grocery store and eat green meat. I wanna know that it's USDA approved and that somebody inspected that and that's okay for me to eat, right? That's right, I'm sorry. Didn't mean to be Dr. Sousse up here, but that consumer protection is important. And how that conversation plays into paying for school and financing higher education is an important one to have. My argument about the loan aversion to people should be going to elite schools, here's an article today about Stanford having free education if you make $120,000 or less. Right, but how many of those, first of all, lowest acceptance rate in the country, five percent, and how many of those students in that economic bracket are actually getting in. So it's like, it's great advertisement and it's great in theory to say, yeah, you know what? We're having a no loan package and you make this much, don't even worry about it, but they're not getting into those schools. So here's something though on the advising people about how much to borrow. What does that look like in a world with income-based payment? Very generous income-based payment. Why would you ever tell them not to, why would you really ever tell them to borrow less because it's always affordable? Well, that's what law schools do, right? I mean, law schools advertise with IBR. Don't they? I mean, come to our school, graduate with $150,000 a day. Well, we're not talking about grad schools today. Oh, you're right, you're right. You're right. It's off the table. It gets us in a very different conversation. You're here waters. I don't think, I think the incentives introduced by a generous income-based repayment program that looks modestly similar to what we have today is not necessarily, it's obviously to borrow more, right? But I think it also, and maybe the stronger effect is to make riskier bets, right? So the downside risk is basically chopped away and the upside risk is still there. And so, you know. Yeah, and I should point out, we've kind of been dancing around this fact that the federal government does limit how much undergraduates can borrow themselves. It doesn't limit how much the parents can borrow, but it does limit how much the undergraduates themselves borrow. So there are some limits already in place. I saw a few more hands. So if we wanna get the, can we get the mic over to, thanks. Just say your name and who you would. Hi, Nicole Eiffel at RTI International. And so I think, Jason, you're picking up right about where I was gonna comment. I feel like there's a lot of interventions that work when we're asking students to first take out their loans. There's that research at a Purdue about if you show a student what their monthly payment is gonna be at the beginning, they take out less. So I think that's less about what the question is. You know, we know some of the interventions we can take at the beginning, but what we're finding in your research or what you're seeing from these focus groups so that not only do we have a disproportionate number of students who take out to those in the room a nominal amount, $2,000, $5,000 in our defaulting, and it's not always about that they can't pay but more this resentment. And so I'm more interested in hearing for that group of students, for those who especially may be non-completers, how do you get them to understand that the place that they are now without a degree but still potentially benefiting from the education that they've already received, how do you get them to buy into the fact that they've paid for that or that they owe something as part of that? You know, I think the resentment itself is a problem, right? Whether the student can or cannot afford to make the payment, the fact that we have relatively, I think relatively widespread resentment of the student loan system is a policy problem that needs to be addressed. The second question is, so there are folks out there who are getting value from their degree because it paid off to them and they have a heightened income because of it. But on the other hand, there are people who invested in a degree, it's not creating value for them. And so I think what you're asking is how can we push towards getting that group who is receiving value from their degree to recognize that value, maybe reframing the way we talk about that so that people can not have that maybe unnecessary resentment, right? I mean, if somebody is getting no value from a degree that they paid a lot of money for and they're resentful about it, fair enough, right? But so how can we reframe this question? And I think you touched on this point and that's this idea of emphasizing that this is a business decision, that it's, you know, people always hate it when you say that this is an investment that pays off in terms of heightened earnings in the future because it minimizes all the other positive things that come from education. So just to get that out of the way, I recognize that those things are there, right? But for a vast, I don't know if it's a vast majority, a very large number of people in this country, the reason they go to college is to increase their potential earnings in the future, right? So we can't ignore that fact. So I think shifting the discussion about college from it being this silver bullet, this thing that you just should do, you know, because it's a good thing for society, it's what everybody's doing these days and it's what our country's built on. We need to think of as like this question of individual responsibility. Is this going to be good for you? How can you make this very nuanced decision in a way that's going to be good for you? And then I think once people have ownership of the decision in that way, I think I believe that what would follow was a recognition of that value in the long run. But that's just a guess, I imagine. I mean, the attitudes in the group around, you know, is higher education good? Is it worth it? What should I do? Among the focus groups, I mean, even for people for whom things didn't work out well, they still thought higher education was great. I mean, they were still sort of doing the talking points that we all have as Americans, which is it's great, we need more of it. It should cost less. Everyone should go, you have to do it. They were, you know, they all thought that. You know, there were a few who didn't, who sort of really felt like that they had gotten burned. And in fact, it was actually a moment where the focus group moderator got very frustrated where she was sort of like, where they were saying, yeah, I think it's great, it's important. And she actually said, come on guys, I mean, with all due respect, things haven't gone well for you. And they're like, yeah, I guess so. But I mean, generally speaking, it's still all good. And some of the people who reviewed the paper really talked about this very strong optimism bias that we have towards higher education. And I think you put that together with schools that are looking to fill seats. And we have zero measures of sort of, we don't do not have very good accountability or quality measures. And I think that those two things, when they're financed with that, you know, really don't go well together. And I think that's a lot of what you saw in the groups. And you know, the resenting the loan then, right, is then sort of surprising. And they weren't large payments. These were $100 payments, $200 monthly payments. And so you ask like, what's the solution there? And I actually, I'm gonna borrow one from Alex Holt here, who has a crazy one. And you will be very surprised to hear me say it, but listen carefully, because it's not exact, what you first hear is not exactly what I'm saying. Stop charging interest on the loans. So no interest loans. Except charge all the interest upfront once. So when you take out the loan, add, say if you borrow $10,000, add $4,000 to the balance right then and there. So instead of $10,000, $4,000. Now some people will be like, wow, that's a lot. No, that's actually what they're gonna pay anyway. In interest, we just don't show them that. So this is actually being more transparent and more upfront with what they're actually gonna get paid, what they're gonna pay in interest. And the reason why I think this is really, valuable is there are no more surprises. And there's no more resentment over, hey, I only borrowed $5,000 and now I owe 20. And yeah, I can afford the payment, but I really don't wanna pay it. And I think it gets rid of all of that. Now you would probably have to make everybody pay based on their income, because if you give somebody like me a 0% interest loan, I'm gonna sit on it forever, and spend the money on investments, something like that. And then you also need some sort of way to incentivize payment and sort of penalize late payment. You need to do something like that, but I actually think this is a great solution to the sort of exploding loan balance and the resentment that comes from that, that I think that we really do it. If we can get people over the hurdle of showing them all the interest upfront, which, and when people are shocked by that, when I say 40%, it's sort of like, oh, better that we hide it then, huh? Is that different than the human capital contract idea? It is because there's a balance. So the income share agreements and human capital contracts are you get money and then you pay a percentage of income for a set amount of time, no matter how much you pay back. So you could get 10,000 and pay back 30. This is still a loan balance. So once you've paid off that balance, you're done. Maybe time for one last question before we wrap up. My name is Samantha, I work at ECMC Innovation Labs. You guys have talked a lot about some interesting solutions to students entering college and how we could counsel them differently and how this could work on the front end. My question is sort of like, what happens to the people who are already in this system? Like how do you fix it for the millions of Americans that are already sort of struggling with these loans and aren't gonna be able to have that interest put up up front? Like what happens then? Do you sort of revert and take away that interest? Like how does that work for the people who are already in the system? Anybody? Beth, you'll just say that they can already afford their payment, right? That's right. All right, well, we'll talk about that. I would say that they have access to income-based repayment, which ensures that their loan meets a minimum affordable level. And so, you know, on the federal student loans, you know, I'm sort of, I'm not quite sure what more do you do beyond that. I mean, I actually, in many cases, I think, especially for graduate students, we've gone too far in that. So, I'm not sure it's a sort of payment to income ratio or debt to income ratio problem. I'm not sure exactly what the solutions are that are flowing out of this particular work. Yeah, I mean, I think the answer is that it's important that we have safety nets for the outstanding pool of borrowers, not just out of compassion for them, but for concerns about debt aversion in the future for new borrowers. The more horror stories we have out there about student loan debt, the worse it becomes for new borrowers being able to make rational decisions about borrowing the future. But right, I think the answer is shoring up income-based repayment or something that looks like income-based repayment. Basically, a insurance policy that the people who made investments and basically lost the gamble, which happens sometimes, should have a safety valve. And we can talk for hours about what that should look like, but it should be a robust system that's simple and we should be moving in that direction with policy. Right, just along those lines, I mean, people make poor decisions all the time. It's just that when you have tons of resources, you're inoculated from those poor decisions, and when you're moderate to low income, you don't have that same type of protection against that. From a policy perspective, what I'd love to see is in October of 2017, the first people eligible for public service loan forgiveness will come to the forefront, and I would like to see a smooth, I mean, maybe this is too much to ask, but I'd like to see a smooth implementation of that. And granted, there are probably just a few bumps in the road, but as we move into 2018, 2019, maybe as a counterbalance to some of those horror stories of people with high balances and who are struggling, you can show examples of, here are people that went through public service loan forgiveness. Here is an option that you have as one of a variety of options as a current borrower. Here's how you can take advantage of the system, because I agree with Jason and Beth, as it stands right now, for people who have student loans, there are a wealth of options that you have. Now, you may not like those options, they may not be the most tasteful, but they're there, and you should not experience the adverse consequences of delinquency and default because you do have options, and I would just stress that. Which gets back to the information on the front end idea, more information and guidance at the front end, I think, which doesn't address what you're saying, except that... Right, well, I did mention the sort of changing the nature of the debt collection to a telling people what your terms and benefits are under this government program, rather than this very opaque debt collection, not telling people what all their options are. I mean, I think that's a real solution so that people know very clearly, and that may be actually taking some options away so that we know exactly what it is I've defaulted, now what can I do and what should I do? I think that would be a big improvement. So I think that's all we have time for. Thank you guys for coming and thanks for participating and asking good questions, and I want to thank the panel. They were great. Not always that you get to talk about a sort of focus group study, it's usually data and statistics, so I realized that that's always a little bit of a challenge, so thank you guys, it was helpful.