Two-thirds of college grads in the class of 2013 will complete school burdened with student loan debt. It will total $27,000 on average. Plus, graduating from college during a period of stagnant economic activity makes it harder for students to find and keep jobs that pay enough.
President Obama has made it clear that he will do his best to keep interest rates from doubling, something that is set to happen on July 1st if no action is taken.
“That means that the average student with those loans will rack up an additional $1,000 in debt,” Mr. Obama said at an event in the White House Rose Garden. “That’s like a $1,000 tax hike.”
Both Democrats and Republicans say they want to stop the federally subsidized loan interest rate on student loans from rising to 6.8 percent from 3.4 percent. In no big surprise, they disagree on how to do that.
Senate Democrats plan to vote to extend the government-subsidized rate for the 7.4 million students with Stafford loans for another two years. House Republicans approved a measure last week that would make the rate variable, tied to prevailing market trends.
To make matters worse, the cost of education keeps rising. Colleges and universities across the country are raising tuition rates and trying to rope in more international students who pay more to attend. They say they need to increase tuition rates due to the government’s chronic underfunding of education, but putting more financial burden on students means more student loans–and more debt.
Many young graduates are living paycheck to paycheck and are unable to put anything toward savings. Countless others have been forced to move back home in order to save money or because they cannot afford to rent or buy a house. A new phrase has even been coined to describe the phenomenon: “the boomerang generation.”
If anything is to change, our two political parties will have to set other motivations aside and put students’ interests first. We will watch to see how they vote.
Cover Image: Shutterstock