Department guidance outlines institutional responsibilities under federal aid rules as nonpayment rates rise.
The U.S. Department of Education recently issued updated guidance reminding colleges and universities of their shared responsibility under Title IV of the Higher Education Act (HEA) to support borrowers in the repayment of federal student loans. The department encouraged institutions to conduct proactive outreach to former students who are delinquent or in default and to strengthen default management plans.
“Student borrowers have an obligation to repay their loans, but institutions also share a responsibility to ensure their students are prepared to enter repayment and understand the consequences of nonpayment,“ said Under Secretary of Education Nicholas Kent. “Institutions cannot benefit from taxpayer dollars while ignoring the fact that a significant share of their students are not well-prepared to repay their loans. It’s time for institutions to step up or risk losing access to federal student aid.”
The guidance suggests practices including improving financial literacy counseling, creating borrower resource portals, and using earnings data to help students make informed decisions before borrowing. The department also released updated nonpayment rate data, indicating that more than 1,800 institutions have rates at or above 25 percent. Institutions with high cohort default rates may lose eligibility to participate in federal student aid programs such as Direct Loans and Pell Grants.
As the Lord Leads, Pray with Us…
- For Under Secretary Kent as he assesses issues within the federal student loan system.
- For Secretary McMahon and U.S. education officials as they steward the programs of the Education Department.
- For student borrowers facing financial strain to find sustainable pathways toward repayment.
Sources: Department of Education
