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Reports from Policy Analysts

Debt Forgiveness in Connecticut

Submitted On: Friday, April 7, 2017

Analyst: Ferruci, Stephen

Education Secretary Betsy DeVoss’s recent (March 2017) memorandum to student loan companies allowing “guarantee agencies to charge distressed student debtors fees equivalent to 16 percent of their total balance”[1] should be of great concern to students and their families as they face increased tuition at Connecticut’s public universities and colleges. According to an editorial in the New York Times, in 2016 nearly three thousand students default on their federal student loans every day[2]. This rate is highest among low-income students, even though they tend to borrow less[3]. Nationally, nearly seventy percent of college graduates from public or non-profit universities and colleges have on average just over $30,000 in debt[4].

In this regard, Connecticut is sadly a leader, as the average student debt in 2015 was just over $34,000. This was the third highest rate in the nation (Oklahoma has the lowest at $25,000)[5].

A number of bills are working their way through the Connecticut legislature to address this issue, at least on the face of it. One such bill is An Act Concerning Tuition Transparency At Public Institutions Of Higher Education, which seeks to require public colleges and universities to post “an itemization … of each expenditure from the previous academic year using funds generated from tuition revenue that equals at least five per cent of the total of such tuition revenue.”[6] Presumably, this is to give students and families a clearer understanding of how their tuition dollars are spent, but given Connecticut’s budget woes and an increasing unwillingness to support public education, it’s reasonable to assume there is more to this bill than transparency.

Other proposed legislation is more forward thinking. One bill seeks to study the feasibility of a “debt free higher education program” which would offer “debt-free grant-in-aid” for students who have exhausted other financial resources (not including loans, so this program could reduce student borrowing, though it only covers tuition and fees[7]). A second bill would require the state’s public and independent colleges to submit reports concerning students in crisis to the Office of Higher Education and the Higher Education and Employment Advancement Committee[8]. Because it requires that these institutions report on “policies that assist students in crisis in securing housing and other basic needs,” this bill would encourage those institutions to have and implement those policies, if they do not do so already.The remaining bill is mainly informational: it seeks to require the Student Loan Ombudsman to inform public service employees about the Public Service Loan Forgiveness program and Teacher Loan Forgiveness program[9].








[1] Nasiripour, Shaheen. “Betsy DeVos Hands Victory to Loan Firm Tied to Adviser Who Just Quit.”

                  To read the actual letter:

[3] Thompson, Maggy. “Why Student Loan Debt Harms Low-Income Students the Most.”

[4] State by State Data. The Institute for College Access & Success.

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