There is growing concern about the "Student Loan Bubble" forming that could be the next big financial crisis. Higher education is becoming almost impossible for most people to afford, driving more to borrow. Nationwide, student loans total more that $1.2 trillion. Teaming up with the federal government, one of Florida's largest community colleges is trying to reduce the amount of debt its students take on.
To get a student loan at Broward College, you first have to sit through a two-hour financial lesson with Kent Dunston. Dunston is in charge of monitoring student loan defaults for Broward College, with a student population of more than 60,000.
The approach is a little like Scared Straight, the 1978 documentary designed to try and keep kids out of prison, except Dunston's lesson is attempting to scare students into making good financial choices. You're not going to borrow more than the amount of money you need to attend, Dunston tells the students. "You'll be offered more. You don't need it."
"We want to assure ourselves that they understand what the hooks are on the back end of these programs," Dunston explains.
Broward introduced this class six years ago; just one effort aimed at preventing students from taking on so much debt that they default on their loans. Starting in 2014, the school began trying something else: barring students from borrowing more than they need.
Broward, along with 28 other community, four-year and online colleges around the country, is trying the subsidized-loan-only approach as part of an experiment with the federal government to cut down on student debt. (The federal government pays that interest on subsidized loans while a student is enrolled).
Schools are now also being held accountable, facing punishment—even closure—by the federal government if the student body default rate is too high.