Education can only be the Great Equalizer when access to it is universal. In an era of already high and continually rising tuition prices, student loans provide access to higher education for not just low-income, but increasingly middle- and upper-income families. Higher Education is directly correlated with higher pay, better quality of life, and just about every measurement you can dream up. Yet, our student loan system is wrought with deep problems:
- National student loan debt topped $1 Trillion this year
- Tuition costs continue to outstrip inflation
- For-Profit online universities’ continue to increase in presence
- Students are strapped with a lifelong debt burden
- Student loan debt is difficult to refinance
Tackling all of these problems will take concerted effort at the national level and a fundamental rethinking of our higher education system. The starting place for that movement is July 1st, 2013. On that day, if Congress does nothing, the interest rate on Stafford student loans will double from the current 3.4% to 6.8%. According to the United States Public Interest Research Group, each full Stafford loan borrower will see an increase of $1,000 in interest costs.
National Student Loan debt increased 373% from $260 billion in 2004 to $970 billion by the end of 2012, and has surpassed $1 trillion by most estimates already in 2013. Stacked against the total $1 trillion number, the increase cost of $1,000 may not seem so terrible. Yet student loan debt is permanent debt which cannot be erased through bankruptcy. Students unable to meet their interest payments fall into a default cycle that savages their credit rating. The default rate for those under the age of 30 is 35%, almost double the 18% or so for those over 50 years old. Should the Stafford loan interest rate double, the already enormous 35% delinquency rate will surely rise. Lowering the delinquency rate on student loans will save millions of families and individuals unnecessary economic hardship. A lower debt burden will also increase the lifetime economic output of an entire generation.
Today, April 25th, the United States Students Association and House Representatives Karen Bass of California and Joe Courtney of Connecticut held the first anniversary of the Student Debt reaching $1 trillion in Washington, D.C.. Instead of kicking the can down the road another year like Congress did July 1st of 2012, join them by lending your support for bill HR1330 to allow students to borrow at lower rates and payback their loans easier and safer.