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 Landyexplains 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.