Nonprofit American Student Assistance Releases White Paper on Student Loan Debt
Wednesday, September 22, 2010
By: Allesandra Lanza

The paper explores the damaging effects of unchecked student loan delinquency on individual consumers and the U.S. economy, and why now is the worst possible time for a loss of federal investment in proactive communication to college loan borrowers.

For Immediate Release
Contact: Allesandra Lanza, 617 728 4631, lanza@asa.org

American Student Assistance Announces Higher Education Debt Management White Paper
BOSTON, MA September 10, 2010 American Student Assistance, a private non-profit that helps students and families manage the repayment of college loan debt, today announced a white paper entitled "Approaching the Tipping Point: The Implications of Student Loan Debt and the Need for Education Debt Management."

Email lanza@asa.org for a copy of the paper or download a copy at: http://www.asa.org/pdfs/corporate/approaching_the_tipping_point.pdf.

Next week the national student loan default rate is projected to rise for the third year in a row, leaving college students everywhere to wonder if their student loan debt is a worthy investment in their future, or a lifetime obligation that will actually hinder their long-term financial success. For far too many students today, the answer is the latter.

"This white paper explores the loss of federal investment in proactive education debt management programs that were proven effective in preventing repayment problems, along with the benefits of incorporating a neutral nonprofit "borrower advocate" into the student loan system to help borrowers make more informed repayment choices," said Paul Combe, ASA president and CEO.

"Approaching the Tipping Point" illustrates that student loan repayment problems no longer affect a small minority of student borrowers. Reports show that as many as one in five student loan borrowers over the last 15 years has defaulted and so it stands to reason that an even higher number of individuals struggle with payment and fall seriously past due.

Student loan repayment problems result in ruined credit records, higher interest rates on other consumer credit, and difficulty in obtaining a car loan or mortgage. If left unchecked, student loan delinquency and default can mean garnished wages, withheld tax refunds and even offset of social security benefits.

But the ramifications of student loan debt "gone bad" extend beyond the personal to the societal. Cumulatively, the deteriorating health of student borrowers' finances has the potential to create another credit emergency like the recent mortgage crisis.

As the nation works toward President Obama's global competitiveness goal of having the "highest proportion of college graduates in the world by 2020," more and more students will have to turn to borrowing to pay for a college education. But when we produce a generation of Americans so hampered by their education debt obligations that they must delay full entry into consumerism, we threaten to do irreparable damage to our economy - just when it desperately needs a jumpstart.
Although federal student loans offer all sorts of repayment protections for borrowers (deferment, forbearance, income-based repayment, etc.), what the program lacks is proactive communication of these options to borrowers.

In fact, an unintentional consequence of the recent student loan reform enacted by Congress was the removal of federal funding for innovative research in proactive borrower communications. These innovative programs were proven to prevent student loan delinquency and default. The white paper puts forth the case for why policymakers should reinstate and expand the federal investment in higher education debt management programs.

"ASA is committed to bringing borrower-focused solutions to the federal student loan program," said Combe. "We hope our white paper fosters an ongoing dialog that highlights the need for higher education debt management today."

Paul Combe is located in Boston and is available for interview by phone or in-person. Call 617-728-4631 or email lanza@asa.org to schedule an interview.

Who is American Student Assistance
American Student Assistance is a nonprofit organization whose mission is to help college students and their families successfully manage higher education debt. Through proactive counseling, guidance, and education, ASA provides borrowers with neutral, personalized federal student loan solutions throughout their entire loan experience. Using a data-driven approach, ASA identifies the key stages of a student loan where the borrower must make critical decisions about repayment and then implements corresponding education debt management communications that are proactive, customized, and well-timed with their outreach. According to the U.S. Department of Education, ASA averted over $120 million dollars in defaults as a result of its debt management programs for federal student loan borrowers. Established in 1956 as the nation's first student loan guarantor and based in Boston, Massachusetts, ASA currently provides delinquency prevention services to 1.8 million borrowers nationwide.