February 11, 2016

February 11, 2016

Crushing Student Loan Debt: Challenges Faced by Students and Parents in Financing Higher Education

Laura Steinbeck, Will Shaffner, Laurel Miller

Laura Steinbeck, Will Shaffner, Laurel Miller

Will Shaffner, Director of Business Development and Government Relations, Missouri Higher Education Loan Authority-MOHELA

Laura Steinbeck, Director of Business Development, Sallie Mae and previously Director of Financial Aid at William Woods University

Laurel Miller, Associate Director of Financial Aid, Logan University; previously Area Director of Financial Aid at Brown-Mackie College with experience at  several proprietary schools


12715493_1078724645513023_539596923324309141_nWill Schaffner described the big picture saying that student debt is trending news but what we really have is a financial literacy crisis.  Financial aid for students began in the 1960s during the Johnson Administration and many of the programs are out-of-date.  The reality is much of this news is about things that happened in the past prior to gainful employment regulations.  The average student debt for college today is $20,000 to $25,000 with the average defaulted borrower owing < $3,800.  He said that higher indebted borrowers pay loans because they have received degrees that allow them to receive higher salaries.  Will stated the high interest rates on Federal loans today are set by Congress and based on prime; private loans have better rates. He said Parent Loans (PLUS) are too easily accessible with no caps or demonstration of ability to pay.

He asked if schools should have more accountability and stated the need for gainful employment regulations, especially for for-profit institutions.  Will stated the challenges as

  • Gatekeeping for educational loan access (a student’s major vs the amount of their loan)
  • The subjective question, “How much is too much?”
  • Student debt can be a life sentence as it cannot be forgiven in bankruptcy and can be taken out of Social Security.

Laurel Miller explained the traditional student no longer exists.  Now students:

  • Delay enrollment
  • Attend part time and want to get out quickly
  • Work part time
  • Are financially independent from their parents
  • Have dependents other than their spouse
  • Attend for-profit institutions with no pre-requisites and really need to be smart consumers to insure they will succeed in these programs.

Laurel’s tips for students include:

  • Completing FAFSA does not obligate you to take a loan
  • Understand the difference between a loan and a grant
  • Ask if the school you are applying to accepts credits from other schools you have attended and if other schools you may want to attend take theirs
  • Ask for a shopping sheet to show costs and aid available
  • Ensure none of their regulations will affect your financial aid eligibility (award year loan limits, aggregate loan limits, defaulting on other loans, lifetime PELL grant eligibility reached)
  • Understand how taking time off from school can affect your loans.
  • Be certain you are student-ready to handle an accelerated program
  • Never feel pressure to enroll
  • Invest wisely in yourself
  • See what support (tutoring) is offered while you are in school

12717803_1078724658846355_1660320326508251311_nLaura Steinbeck shared results of 2 Gallop studies of parents and students.  97% still think school is worth the cost but only 40% have a plan to pay for it.


  • More willing to stretch financially
  • Have the expectation from childhood they will attend college
  • Spend 21% more for college
  • Contribute 2.5 times more income and savings
  • Borrow less

Ways to save for College (including giving money for college instead of toys for birthdays/holidays)

  • Simple savings account
  • Educational savings account
  • 529 college savings plan


  • Find as much “free” money as you can. $8,843 is average annual scholarship amount and it is not just for HS Seniors
  • Explore and apply early for Federal and State options (FAFSA, Grants, work study)
  • Use other options to fill in the gaps
    a) Parent Loans (including home equity but NOT 401ks! Remember the student has no legal responsibility to pay back a parent’s loan)
    b) Private loans
    c) Ask the school about payment plans
  • Parents need to talk to students about their financial situation even though it can be harder than talking about sex!