Higher education used to be the privilege only of America’s wealthy, and out of grasp for the majority of those in the country. Thanks to programs like GI Bills, the spreading of state-based and backed universities and then eventually government student loan options, college eventually became something that was within the reach of many regardless of their financial background.
Within the last decade, that has been changing. A nation-wide recession has had more states cutting subsidies while institutions at the same time dramatically increased the cost of tuition. A highly competitive and technical job market that depended more deeply on advanced degrees as well as the pedigree and contacts that one can only get through post high school education has made an undergraduate degree a necessity rather than a perk for finding employment.
Today, a four year college education is expected even for the most entry level of work, and graduate degrees, doctorates, JDs, medical degrees and more aren’t just holding students out of the job market longer and longer as they are being accumulated, but are driving up the cost of college astronomically. The debt snowballs, while the wages being earned once they are lucky enough to land that first position is unlikely to come anywhere near covering the costs of getting there.
According to Time Magazine, student loan debt has now exceeded over $1 trillion, an amount that is 300 percent larger than just 10 years earlier. As Time reports, ”According to a December study by the Institute for College Access & Success, 7 out of 10 students in the class of 2012 graduated with student loans, and the average amount of debt among students who owed was $29,400.”
That $30,000 in student loan debt may not seem like a drastic amount, but that doesn’t take into account the number of those students who are unable to begin to make any sort of payment because they either are continuing their education, have had to get a forbearance because they cannot pay yet because they have no job, or are simply delinquent. For those students, the amount will continue to ratchet upward, especially as interest accrues.
“Student debt piles on because it takes years to pay off loans, and many can’t afford to pay back such hefty loans until later in their careers,” writes Time. When debt piles on, that’s an economic problem not just for those student loan owners, but for the rest of the economy, as these graduates hold off on purchasing homes, renting apartments, buying cars, moving to different cities, or even the small dollar purchases like a new outfit or a night out at dinner. Without that spending, the rest of the economy remains sluggish as well.
Fortunately, some congress members are recognizing the crisis and looking for a way to solve it. New York Senator Kirsten Gillibrand has been championing the Federal Student Loan Refinancing Act, which would cap interest on student loans to just 4 percent, an amount that is comparable to many recent loan rates for current home mortgages. “I urge President Obama to make refinancing student loans a top priority,” said Sen. Gillibrand in a recent press release. ”Our young people should be able to refinance in the same way that our businesses and homeowners do.”
Loan refinancing is one option, but President Barack Obama put a number of possibilities on the table that would also help to curb the burden of debt. Of them, the proposal to forgive any remaining debt after 20 years of repayment, or 10 if the recipient was active in public service, is perhaps the most promising. Although debt forgiveness hasn’t yet made it into any reform package, with an election just months away and the youth voting block one of the most highly coveted voting blocks in the nation, perhaps negotiations for more forgiveness opportunities will be on the horizon.
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