Borrowing federal loans in order to finance college expenses is now a common student experience in American higher education. Half of all first-year undergraduates accept federal loans, with median debt among college seniors amounting to about $20,000 in 2011-12. Total outstanding student loan debt recently reached $1.11 trillion, up more than ten percent in the last year. More than ten percent of student loans are currently at least 90 days delinquent, a rate that has nearly doubled over the last decade.
As the volume of student debt in the country rises and becomes more visible, policymakers have become more vocal about their concerns with the size of loans, their purposes, and the likelihood of that they will be repaid, along with the potential impact of student loan debt on the economic, psychological, and social well-being of recent generations of young adults. Related discussions focus on rising college costs, rates of non- completion, and the declining purchasing power of grant aid. In upcoming debates over the reauthorization of the Higher Education Act of 1965, several responses are reportedly being considered, including efforts to hold colleges and universities more accountable for reducing student borrowing (through the use of cohort default rates) and/or lowering costs (by introducing college ratings), attempts to reduce borrowing by improving financial education and loan counseling, and changes in eligibility criteria for certain federal loans (particularly Parent PLUS Loans) in order to restrict borrowing.