AFT logo (reads AFT: Education, Healthcare, Public Services)
AFT Resolution

SUPPORTING REFORM OF STUDENT LOANS BY PRIVATE LENDERS

WHEREAS, the public higher education system in the United States, from community colleges to flagship research universities, is a public good that plays a key role in everything from providing new skills and retraining opportunities for workers to training future professionals in fields like medicine, engineering and education to producing groundbreaking research, which has improved the lives of and provided economic opportunities for countless Americans; and

WHEREAS, student loan debt in the United States now totals more than $1 trillion, surpassing credit card debt; and

WHEREAS, the overall growth in student debt is unsustainable, and the growth of private student loans is even more concerning; and

WHEREAS, massive and ongoing state disinvestment in our institutions of public higher education has shifted the burden for the financing of higher education onto the backs of students and their families through skyrocketing tuition and fees; and

WHEREAS, despite the increases in tuition, public colleges and universities are cutting academic programs, are slashing student support services crucial to student success, and are increasingly relying upon a contingent academic workforce; and

WHEREAS, federal student loans have fixed-interest rates and offer an array of consumer protections and favorable terms. Private student loans, which resemble credit cards rather than financial aid, often have uncapped variable interest rates (which have spiked as high as 18 percent in recent years); hefty origination fees; and few, if any, consumer protections; and they are ineligible for federal forgiveness, cancellation, bankruptcy and repayment programs; and

WHEREAS, servicers of both public and private loans have shown an unwillingness to work with students and have in fact illegally deprived them of benefits to which they are entitled;1 and

WHEREAS, student loans should work as a safety net that allows people to get an education with the assurance that, should their finances be strained by layoffs, accidents or other unforeseen life events, they will be protected; and

WHEREAS, two-thirds of private loan borrowers, including those who took out both private and federal loans, said that they did not understand the major differences between private and federal options, and as a result, forty percent of private student loan borrowers in 2011-12 borrowed less than they could have in safer federal Stafford loans;2 and

WHEREAS, increasing numbers of students, especially low-income students and people of color, see their educational opportunities curtailed by the specter of long-term debt; and

WHEREAS, President Obama has called for an aggressive strategy to address student debt relief; and

WHEREAS, Public Service Loan Forgiveness, Income-Based Repayment, and other loan repayment assistance programs need to be supported at both the state and federal levels to help address this crisis:

RESOLVED, that the American Federation of Teachers support legislation and policies at the federal level that will help to reduce the burden of private student loan debt such as the “Bank on Students Emergency Refinance Act”; and

RESOLVED, that the AFT support legislation and policies at the federal level to prevent borrowers from acquiring risky private student loan debt such as stricter banking regulations and requiring borrowers exhaust their more favorable federal lending options before turning to the private market; and

RESOLVED, that the AFT support legislation and policies at the federal level, which increase funding and access to needs-based aid, and simplify the process for applying for this aid; and

RESOLVED, that the AFT support legislation and policies that will increase public investment in instruction and student support services at public colleges and universities and decrease the financial burden for students and their families, rather than restructure and prolong the burden, as policies such as Pay It Forward may do.

1  http://www.consumerfinance.gov/newsroom/statement-by-cfpbs-holly-petraeus-on-doj-fdic-enforcement-actions-against-sallie-mae/

2  http://projectonstudentdebt.org/files/pub/private_loan_facts_trends.pdf

 

(2014)

Please note that a newer resolution, or portion of a resolution, may have superseded an earlier resolution on the same subject. As a result, with the exception of resolutions adopted at our most recent AFT convention, resolutions do not necessarily reflect current AFT policies.