Speaking of Future
Every month I painfully send away a quarter of my paycheck to pay for my student loans. Since I and millions of other students have to do it for the next 20 years, how are we ever going to be able to save for anything?
Last week, the GOP-dominated House Education Committee had a chance to help students out by changing financial aid laws, but they didn't. Earl Hadley, the education coordinator of TomPaine.com just reported that the new Higher Education bill favors lenders over students. The new bill raises maximum interest rate from 6.8 to 8.25 percent and it rejected a bipartisan amendment that would allow schools to provide more aid to students.
GOP claims that the bill has good things in it, such as an increase in the amount you can borrow. But no provision alleviates the fact that our college students graduate with more debt than students in any other industrialized country.
According to Student Loan Watch, student debt in the U.S. has risen dramatically in the last decade. Two thirds of college students now graduate with loans, and their average college debt is nearly $20,000 -- an increase of more than 50% since the early 1990s.
Our growing reliance on loans to pay for college has serious implications:
- Low-income students are extremely reluctant to take out loans. They either skip college, attend it part-time and usually in lower-quality schools, or work excessively, or they join the military.
- Recent graduates who hoped to go into public service -- teaching, social work, non-profits -- find that their college debt pushes them in other directions, usually toward corporate jobs.
- Increasingly, students are extending loan repayment to 30 years, which makes home ownership impossible and retirement saving difficult.
- Unpaid internships, which constitute majority of opportunities out there are not an option for low- and middle-class folks.
The House and Senate will review this bill in September.
If you'd like to stay informed about the ways you can affect national policy related to student debt, sign up on TICAS e-mail list. This non-profit is one of the few groups in the U.S. building an alternative national initiative to reduce student debt.