U.s. Federal Family Education Loan - 1657 Words

Back to the early years of establishing a student-loan scheme in China, the US’s Federal Family Education Loan (FFEL) Program was regarded as a blueprint to follow. This is largely because commercial lenders would use their own private capitals to finance student loans and consequently, the government can invest less and also bear less fiscal burden to initiate a new program. Ironically, the FFEL program was blamed as a wasteful and inefficient system and called for an end by President Obama in 2009, and the Congress ended this program on June 30, 2010. According to Consumer Financial Protection Bureau (CFPB), student loans guaranteed or held by the U.S. federal government had crossed the $1 trillion mark, and outstanding student loan†¦show more content†¦The latest practice in 2014 includes extending the maximum amortization period for student loans to 20 years, and students will have a 36-month grace period for repayment . Establishing student-loan forgiveness mechanism, providing relief to struggling borrowers, and strengthening debt or borrower counseling are also mentioned in this document. Although student loans between the U.S. and China differ widely in funding resources, debt management, and collection, i.e. U.S. government offers student loans at below-market interest rates while the interest rate of Chinese student loans is in accordance with its benchmark interest rate released by the central bank, the American experiences in dealing with loan defaults as correcting the default behavior through proactive measures - offering safety nets(income-based repayments) to student borrowers who face financial hardship, etc. are also worth considering. Research Design A triangulation mixed methods approach (Creswell et al., 2007) containing quantitative analysis and qualitative analysis will be selected to conduct this research. The empirical analysis in this study will explain what factors mainly contribute to loan defaults (student borrower’s ability to make the repayment) and qualitative analysis will identify how student borrowers value their loan repayments (student borrower’s willingness to make the repayment). I will collect and analyze these quantitative and qualitative