New Secretary of Education addresses student loan repayment options, debt relief scams

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Photo Credit: Chelsea Purgahn | Daily Texan Staff

Paying off student loans isn’t easy and can take years, but the Department of Education is trying to make it easier through streamlined repayment options. 

In a conference call Friday with U.S. student reporters, Education Secretary John King Jr. spoke about two ways the department is attempting to streamline the student loan repayment process: income-driven repayment plans and the public service loan forgiveness program. 

Under the new payment options, which were implemented last fall, King said most borrowers are eligible to cap their student loan repayments at ten percent of their monthly income, and qualifying students working full-time in public service can see their loans forgiven after making 120 qualifying payments. 

“I know the spectre of paying off your college loans can be daunting,” King said. “Even though I was confirmed Secretary of Education this week, I’m still paying off loans for the graduate loans that helped me get here.” 

Student Government Vice President Rohit Mandalapu said reducing the amount borrowers ultimately owe is a more viable solution than changing the way college graduates pay back their loans. 

“These measures are helpful as they provide students alternative ways to pay off their loans without being bogged down by the debt of having to pay a huge amount every month,” Mandalapu said. “Still, it would be nice to see even more measures in place like lower set interest rates.”

King also addressed state investment in public higher education, which, for UT-Austin, has decreased from 47 percent of the University’s budget in 1984 to 13 percent in 2013. In response to a question about middle-income families who do not qualify for financial aid to afford college, King said state support for public higher education institutions has decreased, and his department has urged states to make sure to invest more in education. 

“We’ve been urging states to pay careful attention to their level of investment in higher education,” King said. “One of the things that has driven higher costs for students and families has been disinvestment by states for the last decade in public higher education.” 

In response to the same question, Christine Gauger, assistant director for federal and state programs at UT’s financial aid office, said other factors such as family size and number of children in college affect student aid eligibility calculations, not just income levels. 

“We recommend that no matter what [students’] income level is, they go and fill out the FAFSA,” she said. “We try to get out as much money we can to the students who are eligible to receive it.” 

King also spoke out against “debt relief scams” which charge students for services such as lowering their monthly payments or consolidating their federal loans. His office, he said, has sent cease-and-desist letters to scammers who falsely use the Department of Education’s logo in communications with students. 

“Some of these companies misrepresent themselves by using our logo, or they violate your privacy by inappropriately using your FSA ID,” King said. “If someone tries to charge you for these services, think twice.” 

Gauger said the UT financial aid office warns students about fraud via social media, but hasn’t received any complaints from students about financial aid scams. 

“You should never have to pay to get help with your loans,” Gauger said. “We always tell students to go directly to their direct-loan servicer.”