As the price of an education grows steeper across the nation, so too has the burden of student loans. Student debt will surpass a staggering $1 trillion this year, meaning total student loan debt will be greater than the credit card debt in the United States. Something must change.
Though it is not comprehensive, President Barack Obama’s plan to ease the weight of federal student loans is a stepping stone along the path toward reducing the pain of such exorbitant costs.
While Congress passed reform to the income-based repayment system last year, which would have begun in 2014, the White House revealed Tuesday that the plan has been moved up to be implemented next year. New borrowers would only have to pay 10 percent of their discretionary income for at most 20 years under the reform. The current system requires 15 percent at minimum of discretionary income to be paid with a cap at 25 years.
The plan also allows those with different kinds of federal loans to consolidate these loans and get a half-percent cut in interest. This could aid 5.8 million borrowers.
We applaud Obama’s plan because it will benefit millions of college graduates who need a reprieve from burdensome loans.
Still, the plan does not fully address the problems plaguing graduates. Not only do these new measures leave out many former students (for example, those with loans from 2007 or earlier will not be eligible for the new income-based repayment program), but the plan also leaves another major obstacle for borrowers unchecked: paying off private loans. Loans from private sources — typically banks — do not offer the same protections as federal ones and generally have higher interest rates. Thus, the plan excludes those who remain vulnerable to the whims of private lenders.
While we are glad that Obama is taking steps to address the encumbrance of student loans, more must be done to ensure financial stability for our nation’s posterity.
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The main reason the price of education is too high is specifically because of the ludicrous amount of federal aid available for education. The result is that we have an equally ludicrous surplus of bachelor’s degrees flying around, the bulk of them totally worthless. More importantly, students signed these things called “contracts” that have been around for a few hundred years, and generally, before you do that, you get to do something called “read.” Additionally, it’s generally advisable to “think” about whether the benefits of the arrangement exceed the costs. Buying into the dogma that higher education is the sole path to prosperity and then mortgaging your future to Sallie Mae is a stupid decision, and it’s your stupid decision. Don’t be stealing from me because of your myopic deference to the establishment.
The college education bubble will burst, just as the home mortgage bubble did several years back. The difference is at least a home, even an overpriced one, has some utility and hence some residual value. What will these hundreds of thousands of students with useless liberal arts and humanities degrees have but a diploma that is the laughingstock of potential employers? We can all joke at Bambi the Blonde’s degree in Communications, knowing that Daddy will be around to pick up the tab. The real outrage is that an unholy alliance of Affirmative Action, Political Correctness, and the college financial aid racket have taken low-income minority students who are unprepared for college, pushed them into various race/ethnic grievance courses that have no value in the outside world, then left them saddled with debt, when they would have been better of pursuing some trade or vocational/technical 2-year program at a local community college. I’m curious to see how the defenders of this nonsense will reply once the sh-t hits the fan…