Behind the Bumper Sticker: Repayment Rates
With a possible reauthorization of the Higher Education Act (HEA) on the horizon, there’s a big focus on making sure all students in our higher education system see a return on their investment. One proposed option for measuring this ROI is to look at the repayment rates of borrowers to determine if schools or programs set most of their students up to start making payments on their loans within a few years of leaving school.
And while this might sound like an easy fix at first glance, there are still a number of questions surrounding how repayment rates could be used as a measure of student success. How should they be calculated? What exactly should count as “repayment”? Should we look at repayment rates by school or by program? Should they supplement or supplant other existing metrics like Cohort Default Rate? And how might we anticipate and avoid unintended consequences of using a repayment metric?
To find out the answers to these questions and more, Third Way hosted a lunchtime panel discussion on Capitol Hill at the seventh installment of our “Behind the Bumper Sticker” event series. The conversation moderated by Lanae Erickson, Senior Vice President for Social Policy and Politics at Third Way, explored possible definitions and assessed methods by which to calculate the repayment rate metric as a measure of ROI. Erickson was joined by Emily Bouck West, Deputy Executive Director at Higher Learning Advocates, Victoria Jackson, Senior Policy Analyst for Higher Education at The Education Trust, and Dr. T. Austin Lacy, Senior Research Education Analyst at RTI International.
The conversation focused heavily on one of the barriers to using repayment rates which is how to define and calculate them. Some experts believe that repayment should be a measure of the percentage of students that pay down one dollar of their loan principle within three years of leaving a higher education program; whereas, others believe that repayment should be a measure of on-time payments, similar to what is included within the College Affordability Act (CAA). This accounts for the proportion of students who are making on time payments for their loans within a few years of leaving.
All of the panelists, recognizing that the Cohort Default Rate (CDR) is no longer a sufficient accountability metric expressed that the repayment rate metric should supplement other existing metrics, not replace them. Questions that still hang in the balance are what types of sanctions institutions should receive if they fail a loan repayment measure.
Watch the live stream for a full recap of the discussion and be on the lookout for our next installment of #BehindTheBumperSticker by following us on twitter @ThirdWayEDU. And please reach out via social media or directly to our Education Events Coordinator, Chelsea McKelvey ([email protected]), if you have ideas about what topic you’d like to see covered next!