“Student loan debt bomb” looms; how do the candidates address it?
by Félix Pérez
The only two certainties in life are death and taxes, said Mark Twain famously. If Twain were alive today, he would be tempted to add a third item to his list: crushing loan debt for college students and recent college graduates.
By one estimate, the “student loan debt bomb” could be on a par with the mortgage crisis that has rocked the U.S. economy. According to a recent survey, more than 4 of 5 bankruptcy attorneys reported an increase in the number of distressed student loan debtors seeking help in the last three to four years.
Audrey Padilla, a classroom teacher for five years in Bronx, NY, graduated with $85,000 in student loans. “It’s so unfortunate that so many talented teachers continue to struggle financially to pay back student loans, while doing something they value as a profession. I wish members of Congress could see the unfortunate situation that many of our nation’s teachers are facing, and understand that not addressing this issue will only scare off our teachers of tomorrow.”
Making matters far worse this summer is a potential doubling of the interest rate on federally subsidized Stafford loans unless Congress acts. The increase from 3.4 percent to 6.8 percent would affect 7.4 million borrowers.
So how do President Obama and leading Republican presidential contenders Mitt Romney and Rick Santorum plan to honor our nation’s commitment to place a good education within reach of students willing to work for it?
President Obama fought for passage of the Health Care and Education Reconciliation Act of 2010, which strengthened the Pell Grant program and helped student borrowers manage their student loan debt by capping repayments. The U.S. Consumer Financial Protection Bureau launched the Student Debt Repayment Assistant online tool to help students determine the best repayment option for them. And in his State of the Union address in January, the president urged Congress to act to prevent the Stafford loan rate hike from taking effect.
Santorum makes no mention of higher education on his campaign website. Recently, he called President Obama a “snob” for wanting all students to have access to education after high school. “President Obama once said he wants everybody in America to go to college. What a snob.”
Romney, who until this month did not list higher education — or education at all — on his website, was short on specifics when pressed by an Ohio high school senior worried how he and his family would pay for college.
The outstanding student loan balance ($870 billion) now surpasses total credit card debt ($693 billion) and total auto loan debt ($730 billion). With college enrollments increasing, cuts in state funding to higher education and the costs of attendance rising, this upward trend is expected to continue.
A report published this month by four economists at the Federal Reserve Bank of New York found that 27 percent of borrowers are delinquent in their payments.
Readers share their stories about student loan debt. Read More
Sen. Elizabeth Warren proposed that students should be able to borrow money for college at the same rate as big banks. Read More