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Sunday, January 20, 2019

As Student Loan Crisis Worsens, GOP Senators Vote To Repeal Help For Borrowers

As Student Loan Crisis Worsens, GOP Senators Vote To Repeal Help For Borrowers

This past weekend, every Republican in the Senate voted to repeal the student loan reform signed into law in 2010.

Though the measure was defeated, it was a clear sign that the GOP doesn’t take the growing student loan crisis seriously. In fact, they’re willing to add to the deficit just to make it worse.

Student loans only make up a small fraction of total debt in the United States. But they are the leading source of delinquencies over 90 days, and the number of loans past due rises every month.

The Century Foundation‘s Benjamin Landy explains that “the recent delinquency trend may be driven by borrowers who graduated or entered the job market at the height of the recession and have now reached the end of the maximum three-year deferral period allowed under the federal loan program.”

Landy calls this “student financial fatigue.”

Recently graduated borrowers are set to get some relief, thanks to the student loan reform. Beginning in 2014, recent borrowers who have sought relief from their loans will only have to pay 10 percent of their income in repayment, down from 15 percent. The remaining debt can be forgiven after 20 years, down from 25. This small but crucial measure is designed to help exactly the borrowers most likely to go into delinquency.

The law also raises the amount students can receive in federal Pell grants and tracks that maximum to the Consumer Price Index for the first time ever.

The reforms will also pump more than $100 billion into the economy by taking big banks out the government’s loan process. Private banks had been servicing the loans, making free money at taxpayer expense. The reforms take that money and give it to low- and middle-income students to help pay for their education.

The reforms also send $2.55 billion to support historically black colleges and universities and minority-serving institutions, with an additional $2 billion for community colleges and $750 million to help students access and complete college.

And the reforms will cut an estimated $10 to $62 billion from the deficit over the next 10 years.

With student loan debt having recently surpassed $1 trillion total, it’s clear more needs to be done to help ease the burden on graduates. Instead, the GOP in the Senate wants to erase the little good that has been done for them.

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8 responses to “As Student Loan Crisis Worsens, GOP Senators Vote To Repeal Help For Borrowers”

  1. idamag says:

    This nation is showing the affects of the way we treat education. Stupid is not considered a virtue. If we are attacked by cyberweapons, will we have the intelligence to combat it. Or do you think that Ma and Pa Kettle can throw eggs at the enemy?

    • Daniel P says:

      Stupid isn’t considered a virtue? Clearly you don’t watch much television.

      • idamag says:

        Daniel, I made a typo and it wouldn’t let me fix it. The sentence should have read, “Stupidity is now considered a virtue.” Television is part of the problem. Reality shows don’t offer much stimulation, hence the audience gets dumbed down.

  2. elw says:

    Everyone should have access to advance education without it breaking their backs financially. It does not matter if it is in traditional universities or technical trade schools that teach the latest and best in a field. Without an educated public this Country will indeed NOT find its way into the furture. We are already behind other countries when it comes to education, it is time to catch up.

  3. MacK says:

    I find it shocking that I think the Republicans have a point about Income Based Repayment (IBR). But, the reality is that IBR sets to make the higher education cost problem worse not better because it is a blank check to the US colleges and graduate schools to keep raising tuition. Law schools are actively marketing IBR to potential students – who are going to graduate into a job market where there a 2 graduates for every job and most jobs pay too poorly for the students to cover the interest on well over $100,000 in debt.

    What would be smart is to restrict the ability of colleges and graduate schools to lend if too many of their students end up on IBR. In effect, cap the number of student loans they can write at say 2012 levels and reduce the number by one loan for every graduate per annum on average that ends up on IBR. That would force colleges and graduate schools to consider the impact of tuition and courses on their students employability – something few academics seem to care much about right now – it would turn IBR into a tool for forcing down tuition costs and an underwriting meter for federal student loan guarantees.

    I find the failure of this article to address the negatives that pretty well every economist has identified with IBR surprising – was this story spun to him by lobbyists for higher education? I also find it surprising that the author failed to take a hard look at the economic impact of the current student loan system which has been driving out of control tuition increases in the US for 30+ years.

  4. nobsartist says:

    Actually, it appears that supporting the college sports industry with tax payer dollars under the guise of education, just isnt working.

  5. idamag says:

    Remember when you are grousing about tax dollars going to education – an illiterate nation is a weak nation.

  6. Sand_Cat says:

    Once again, it becomes obvious the Republicans know their remaining in office depends on widespread ignorance, desperation, and frustration.

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