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Tuesday, October 25, 2016

Student Loans

On Monday, federally subsidized student loan rates doubled because Congress failed to pass a permanent solution to relieve our debt-stricken students (or even to extend the current rates until they could agree on a plan). There are very few policy issues more deserving of our representatives’ attention.

As we hear in our Democracy Corps focus groups and surveys, middle-class and working people desperately want Congress to address the cost of higher education. Students who can afford the high and rising costs of board, tuition, and fees — which now average $22,261 at public schools and $43,289 at private schools — do not need to worry about student loan interest rates doubling.  This is only about those families who cannot afford to pay for the rising cost of higher education.

At one point or another in our careers, James, Stan, and I have all taught at colleges or universities, so this is a topic about which we feel strongly.  As James recalled in It’s the Middle Class, Stupid!, he was able to pay his law school tuition out of pocket in the 1970s, even though he was not wealthy. The result, James noted, was that state colleges and universities “functioned as a kind of equalizer.”

That is no longer true.  The average all-in cost of private colleges in the U.S. is almost equal to the median household income (which hovers around $50,000).  But as James noted, it was not always this way. Our very smart friends at the Economic Policy Institute note that while median household income increased 10.9 percent from 1983 to 2013, the average cost of public school tuition rose 130 percent — leaving many families in the dust, and very much reliant on student loans.

Add to this the ongoing economic stagnation for middle class and working Americans, and we are looking at a crisis that could be crippling. We all know that young people face diminished job prospects out of school.  But this crisis is not limited to 20-somethings.  It also hits those in their 30s and 40s — who pay their student loans from stagnant or diminishing incomes — and those in their 50s and 60s who struggle to pay mortgages, save for retirement, and put their children through school.

Next week, Democracy Corps will release a serious report on recent focus groups we conducted in Orlando and Columbus for the Economic Media Project.  One of the things that struck us in these groups was how much we heard about the student loan crisis — and participants did call it a crisis:

“People coming out of college are getting off on the wrong foot.  My husband has $58,000 worth of student loans and isn’t making even close to what he needs to be making to pay it off.  They’re saying that you need all this education to get these jobs to make more money but yet you come out of college with all this debt and you can’t ever catch up.”

“I have plenty of student loans that I’m paying.  I have a degree. I’m working as a bartender not by choice; not saying I love it but I make more money doing that than any position I could get with my degree so I pay my student loans as a bartender.”

“I can’t go to school because my credit is bad because of my previous school loans but I can’t afford to pay them. There’s not really anything I can do to better my education because I can’t afford it and I can’t get a loan.”

“It’s important to have an education but the cost …I wonder is it worth it?”

“When you come out of school you’re $50,000 or $100,000 in debt. You’re lucky if you’re making, you know, $30,000 or $40,000 a year. That’s paying your bills. That’s paying your rent. You’re not paying off your debt so you’re never getting ahead.”

“It’s more for the financial reasons where, you know, we have a student loan crisis basically where you’re getting into so much debt to get that degree, to get that better job, that that is becoming cyclical where you are working just to pay off your student loans so it’s almost, it’s a double-edged sword.”

When Congress returns after the holiday week, I hope they commit themselves to the students who would like to return to school next fall, but are having a hard time budgeting for it.

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  • Lenore

    If foreign students are the only ones, other than the 1% who can afford to attend college, we are dooming our children of the poor and middleclass to a third world future, no education, no well paying jobs, no home ownership, no futurs retirements, and those foreign or rich with higher ed degrees will be taking the jobs anf futures our youngsters could be living

    • lana ward

      Thank Obama. everything he does hurts Americans

      • Donna Shelton

        Thank the obstructionist GOP. They refused to act on the issue and allowed the interest rates to double. Obama had nothing to with it.

        • lana ward

          Obama has to pay for Ocare. He has everything to do with it. He and all the dems. You need to check things out before you speak

          • Donna Shelton

            Where is your evidence, lana?

          • Donna Shelton

            The “Student loan interest hike to pay for Obamacare” lie has been soundly rebuffed by facts. I suggest you do your homework.

          • BelleStarr

            Surely you’re not asking a troll/Fux Noise fan to do anything to back up their rhetoric? They get all their facts straight from the horse’s asses at Fux Noise.

          • lana ward

            Obama is postponing the business mandate for 1 year, until after the 2014 elections. He knows if it goes through in Jan 2014, dems will lose seats. Other dems like Max Baucus has said Ocare is a trainwreck. Don’t you listen to what’s going on. Dems in congress wanted themselves and their staff to be exempt from it

          • BelleStarr

            She’s just repeating what she heard from the talking heads at Fux Noise. Anyone who spouts nonsense is either a troll or a member of the brain dead bunch that watch Fux Noise.
            Asking them for evidence is the last thing they want to hear.

      • tax payer

        I am glad the Republicans aren’t blame for what Obama does to this country. The Republicans are trying to save money for our country and the DemocRats are trying to give the money away to those that don’t deserve it.

        • BelleStarr

          Troll much?

          • tax payer

            If ( Expressing Your Opinion Is Considered Trolling ) it means we all have the same habit. I got the definition of Trolling by a certain individual awhile back and it didn’t make much sense to me since you have the right to your opinion, and like it or not we will state them since this Blog is open to anyone that wants to share their opinion. It doesn’t mean others have to like it, but that’s why we have Freedom of Expression unless you work for a company and they shut you up for good or fire you. The NBA is a prime example of what I am referring about because the players and even owners can’t say anything because they will have to pay a Fine for Expressing their Thoughts.

      • Rick James

        my five fingers have something to say to your face: SLAP!!!

        • lana ward

          Tell me what Obama has done that hasn’t hurt Americans, smarta##

    • BelleStarr

      I believe that is their plan. A two class system, Us and Them.

  • Dominick Vila

    Doubling the interest rate charged to needy students interested in pursuing a college education is an expression of national suicide. As a minimum, it is a myopic decision that ignores the fact that the future of our nation – of every nation – depends on the ability of our children to meet the challenges that lie ahead. Instead of providing free education to bright students without the financial resources they need to get the training they need to succeed, our elected officials are making it as difficult as possible for them to achieve their goal, while passing laws that make it easier for those who already own 2/3 of our national wealth to amass a larger fortune, while protecting loopholes and ignoring tax havens, and while continuing to give subsidies to corporations that don’t need them to realize a profit. Shame on them!
    One of the most effective tools used by political and religious leaders for millennia to control the masses has been to keep the populace ignorant. This decision is far from being an exception to that rule.

    • lana ward

      Doubling the interest rate of student loans is to help pay for Obamacare

      • Donna Shelton

        Obamacare is already saving money.

        • lana ward

          Ocare is breaking Americans

      • BelleStarr

        You need to do a little research before spouting RWNJ rhetoric. I can only assume you are a troll, since you obviously don’t know what you’re talking about.

        • lana ward

          I know what I’m talking about, it’s you who needs to do a little research

  • Lovefacts

    Hopefully, this will galvanize students and their to vote in 2014. It’s now not just political, it’s economic. It’s also proof the Republicans don’t care about the middle class or poor, only the wealth. When history writes about why the US fell into third world status, the Republicans’ stands against well paying jobs, home ownership, affordable education, decent and affordable medical care, infrastructure, and jobs for its citizens will be part of a long list of crimes against this country’s citizens.

  • quasm

    Ms. Seifert; Congress could eliminate this problem today. Stop inflicting these burdensome loans on students. If a students think the cost of the loan excessive, they don’t have to take it. They must learn at some point to be responsible for the obligations they take on.

    • awakenaustin

      Wow, what a thoughtful response.

      Maybe the issue being discussed is the cost of education and how it is being denied to large numbers of people because of its costs and that burdensome loans contribute to the problem rather than ameliorate it.

      But you have come up with the perfect solution. Don’t go to college. Do try to improve your education. Don’t try to improve your life chances. Stay poor and uneducated.

      • BelleStarr

        Or, they could do as Mitt the twitt suggested – borrow from their parents. If you can’t do that, then pay whatever price ‘they’ want to charge. The ultimate goal is Us and Them, 2 classes, and guess which one middle America is in.

  • irishtap

    I’m beginning to think the GOP masturbates when they know they’ve created financial hardship for citizen’s.

    • BelleStarr

      Oh no, these bible thumping christians wouldn’t dream of masturbating and spilling their future children on the ground. Maybe we need some laws against men masturbating – after all, they are half a fetus.

  • springerj

    The interest rate should be pegged the cost of borrowing to the Federal Government (ten-year Treasury bonds). The feds borrow money at < 1%. They should loan it out at no more than 4%. If they borrowed at 5%, then loan it at 8%.

  • Observer

    Interest rates are a problem but there is something that is mentioned in this article that
    is more of a problem “while median household income increased 10.9 percent from 1983 to 2013, the average cost of public school tuition rose 130 percent”

    Universities are sucking students loan without accountability and most commentaries I read sound like sucker’s complaints (sorry if it is one of yours). Good luck!

    And don’t tell me that education in 2013 is better than in 1983. The reverse is probably true

  • tax payer

    Wise parents start saving money for a college education for their children right after the child is born. By the time they are ready to enter College they have enough for maybe two or three years, if ( they work part-time along the way ). Why borrow money, when it’s right there in front of you, but you have to set aside some of it for your children to get a Degree, so they won’t be depending on the Government to lend them money to get an Education. A Scholarship does help too, so make sure they keep up their Grades and maybe the money you saved can pay for other things for them while going to College.

    • awakenaustin

      What I find amazing is the number of people in this nation who live in a bubble and believe everyone else is just like them. This allows them to believe the problem is a lack of wisdom or profligacy which prevents others from saving for college for their children, rather than an education system which is too expensive, even at the state college level, for most families.

  • jack

    wake up people it’s the fedral government’s involvement in student loans that has driven tuition rates so high in 1930 when you had to pay your own way thru school tuition to harvard was $400.00 its now$ 40,000