Reform is in the air for federal student lending. President Obama’s budget has landed in Congress’s hands, and with it goes the proposal to cease all new loan origination via the Federal Family Education Loan Program (FFELP). Yet before changing the futures of so many American students, shouldn’t lawmakers take a moment to examine what’s working in FFELP—and bring the best of both programs to the reformed student loan system?

Growing Need for Borrower Support
The U.S. higher education system depends heavily on loans to help students fulfill their education dreams—turning millions of college students into new loan consumers each year. The average student loan debt burden for a bachelor’s degree recipient now stands at $22,000, which is more than the starting salary for some college graduates. Most recently, we’ve just learned that student loan default is on the rise, with the national draft Cohort Default Rate hitting 6.9 percent, up from last year’s 5.2 percent. Yet the Obama Administration’s federal student loan blueprint does not address the role of guarantors, many of which have a proven record of successful default prevention.

In the existing student loan programs today there are limited life-of-the-loan support systems for borrowers, even though recent reports have found that college graduates hunger for more debt management information and feel unprepared for their loan responsibilities. An ASA study found that 83% of respondents said, “College students should receive more information about loan repayments”; 63% said, “I had only a vague idea about the amount of debt I was incurring”; and 49% said, “My loan repayments cause me more hardship than I anticipated.”1

Informed student loan consumers are able to access some information from commercial providers, but information is limited and often too general to be helpful. Financial aid officers are able to provide some degree of assistance, but are frequently under considerable demands to meet the needs of their current classes, yet alone alumni facing repayment. Debt management and financial literacy services are provided by guarantors, but these services are not provided universally, and students participating in the Direct Lending program have no access to guarantor-provided support at all.

Education Debt Management Is a Right
This disparity overlooks a fundamental problem in our student loan system: If public policy determines that most students will incur loan debt as a means to achieving their educational dreams, then it must also address these students’ need for education debt management. All U.S. student loan consumers, regardless of the source of their loans’ capital, have a right to neutral, third-party information; timely and responsive advice and service; and mediation of issues to help them make wise choices about borrowing and repayment at every stage of the loan process.

Built-in Support Exists, But Must Evolve
Guarantors are ideally suited to fill the role of neutral, third-party providers of support for borrowers over the life of the loan, unconflicted by any ownership in the loan. As non-profit, federally funded organizations, guarantors already work closely with student borrowers, schools, lenders, and the federal government. And their years of experience working “in the trenches” to resolve borrowers’ issues has earned them expertise in communicating respectfully and effectively with this important audience.

In their evolved role, guarantors would continue to provide information to student loan consumers in the community; provide early awareness, financial literacy, and personalized debt counseling to avert default; and work with defaulted borrowers toward rehabilitation. In addition, guarantors would review default claims made by lenders from the borrower’s perspective, to ensure the claims are valid and that borrowers received all of their rights as set forth by federal regulations.

Put Borrowers First
In the end, the fundamental issues remain: Students are bearing ever-increasing amounts of education debt, and most of them lack the skills to manage it successfully. Guarantors have been delivering debt management counseling and default prevention for years. Now it’s time to put borrowers’ needs first and make life-of-the-loan support a true guarantee for all student loan borrowers—no matter the source of their loans.

1. These results are from students at a medium-sized, public, Midwestern university in the study “ASA Reports on Student Debt and Alumni Giving,” conducted by Drs. Margaret Platt Jendrek and Jean M. Lynch, Department of Sociology and Gerontology, Miami University, Oxford, Ohio.

This article was submitted by American Student Assistance. To learn more about the evolved role of the guarantor in the federal college loan program, visit borrowersrights.org.