Student debt symptom of lax cost control
Remember 1TDay? Probably not. On April 25, student loan debt was projected to reach the $1 trillion mark. Demonstrations were held on campuses across the country.
Protests were held but the nation wasn’t exactly galvanized by the marchers or their cause.
More attention was paid to a Federal Reserve Bank of New York report released one month earlier that showed student loan debt had exceeded what’s owed on credit cards and auto loans. That was an eye-opener.
Since then, President Barack Obama has stepped up his appeal to ease the financial burden on young Americans saddled with college debt and facing not-so-promising job prospects.
As Republicans have noted, that campaign conveniently dovetails with a voting constituency that supported Obama four years ago — and carries a price tag. Senate Republicans moved to block a Democrat plan to help out students taking on federally subsidized education loans.
No way the issue could end there. Republicans have special interests of their own and, like the president, they are especially interested in winning the White House. Alienating the youth vote — even though turnout tends to be disproportionately low — is not sound politics.
A 2007 law that initiated a series of reduced interest rates on subsidized Stafford loans to students is set to expire Sunday. Without congressional action the current 3.4 percent interest rate will double to 6.8 percent.
Again, Congress has fiddled until the drop-dead date to work out an election-year deal.
The impasse: Who will pay the $6 billion cost estimated by the Congressional Budget Office?
Smart-money political tipsters predict legislators will reach some sort of compromise over the weekend, if not before. In 2013, another kick-the-can Congress will take it up again 365 days later.
Not that it’ll make that much difference to all that many. About 30 percent of students get subsidized loans. Only 3 percent of the $1 trillion student loan debt would be touched.
The root problem is this: With tuition costs rising about twice as fast as general inflation, the U.S. higher-education system — acknowledged as the world’s best — is sustaining its growth on the backs of students. Backpacks full of borrowed cash are bringing students to their financial knees.
State budgets are in no position to take up the slack for public universities. Generously endowed private colleges are holding their own, but others are having to compete for paying students. Colleges and universities owe it to their honored legacies to find new ways to utilize technology to reach future generations of tech- savvy students. In that way, costs can be contained.
The spiraling cost of higher education is a broken promise to a generation of young Americans.