The Nation - News from Nov. 7, 1988

Education Secretary Lauro F. Cavazos is seeking the advice of thousands of lenders, colleges and universities as well as public officials on how to hold down the escalating default rate on student loans. Taxpayers spent $1.5 billion to cover defaults on the guaranteed student loan program in the fiscal year that ended Sept. 30, almost 43% of the program’s entire cost, the Education Department said. That figure represents a 200% increase over the last five years in what is now known as the Stafford loan program, the department said. Cavazos wants to know to what extent lenders, guarantee agencies and schools should share in the risk of defaults; how communication can be improved among those participating; whether credit reports and co-signers should be required for borrowers with poor credit histories, and how financial couseling can be implemented most effectively.