Stafford Loan Justice

Legacy

Earlier this week, Professor Diane Ravitch penned an eye opening essay on Arne Duncan’s “legacy” as Secretary of Education. Among the subjects discussed by Dr. Ravitch are No Child Left Behind (P.L. 107-110), with its focus on standardized testing, and other policies that encouraged “privatization and undermining the teaching profession with a $50 million grant to Teach for America to place more novice teachers in high-needs schools” (para.2).

One matter that isn’t outlined in Ravitch’s article is the power the Secretary of Education has in student loan reform and borrower “justice.” According to the U.S. Code, the Secretary of Education “may promulgate regulations limiting the amount of interest that may be capitalized on such loan, and the timing of any such capitalization” (20 U.S. Code § 1087e(5) – “Terms and conditions of loans”). While I am not a member of a legal profession, I interpret this passage from the U.S.C. as granting the Secretary of Education decision making authority over student loan capitalization policies and procedures. It is capitalization that increases the overall amount of the loan, especially on unsubsidized loans; it capitalization that is an obstacle to repaying the loan principal. The basic issue of capitalization has never been addressed by the Secretary; nor have exact details of the Department of Education’s capitalization formulas and policies

 

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Written by S.

July 12, 2015 at 9:32 pm