Dive Brief:
- The extent to which government agencies track and analyze student loan debt is far inferior to the processes in place now for home mortgages.
- In a New York Times piece, University of Michigan professor Susan Dynarski that the U.S. Department of Education doesn’t have the capacity to monitor its $1 trillion student loan portfolio, and other federal agencies that could — the Federal Reserve, the Consumer Financial Protection Bureau — don’t have access.
- Dynarski criticizes the lack of information about delinquent borrowers, borrowers eligible for federal debt relief, or the institutions whose graduates are most likely to default — information that would help get a handle on the general risk these loans pose to individuals and the entire economy.
Dive Insight:
The lack of home mortgage monitoring was a direct contributor to the 2008 financial meltdown and Dynarski hints the Department of Education’s slack monitoring of its student loans is similarly troubling. The sheer scope of the nation’s student loan debt, so much of it held by the federal government, is reason for concern. The fact that we can’t find patterns in it because of lack of capacity in one department is a significant problem. While privacy concerns are valid, the Department of Education would not be the first federal agency to cooperate with private researchers after editing data to hide the identities of individuals. And as Dynarksi said, the capacity lies within the federal government. Perhaps, as she says, the Education Department should let these other offices get to work.