President Obama spoke at Georgia Tech University Tuesday, addressing the topic of student debt.
UI students are painfully aware of the difficulties surrounding the repayment of student loans.
College students around the nation are struggling to make ends meet postgraduation.
According to the White House, more than 70 percent of U.S. students graduating with bachelor’s degrees leave with debt. This averages to $28,400 a student. This isn’t always the reality, though; 10 percent of students graduate with more than $40,000 of debt.
This puts the UI at a little lower than the middle, whose students graduate with $25,446 of debt on average. Based on percentages, the UI is also competitive, with a little more than 60 percent of students graduating with some form of debt.
The United States has a whopping $1.2 trillion of combined student debt, with $1 trillion of that owed to the federal government. According to Forbes, student debt is now the second highest form of consumer debt, behind only by mortgages. And student debt is problematic for students and nonstudents alike. When the federal government lends money to students who default on their loans, the taxpayers pick up the slack.
Because of the taxpayers, federal loans are much safer than private loans for students, especially where default is concerned. It takes nine months to default on federal loans; private loans may be defaulted after one failed payment. The increased importance of defaulting on a loan, and what that means to a borrower’s credit score, means the incentives to take out federal loans are increasing over time, perpetuating the problem.
Yet, the federal government has a duty to make these loans available to ensure U.S. citizens attend colleges and get degrees. In a globalized, information-based economy, education is a premium and necessary for growth.
While Obama’s move to make community college free for many is a nice gesture, it is more smoke than fire. The price of entry may be lower, allowing for more people to attain associate’s degrees, but the problem of student debt is not being addressed directly enough.
Debt costs time for saving. It pushes back the ability to buy a house and establish a family. Student debt hampers the economy, slowing it like a ball and chain.
Student debt is a serious problem that is growing, and Obama touched on these concerns at Georgia Tech. Unfortunately, no sweeping reform appears to be on the horizon. His plans do not aspire for much more than simplifying the repayment process and offering services to assist in repayment.
Whether federal government should be able to profit from loans given to students attending its universities will not be discussed by the executive branch anytime soon.
The Daily Iowan Editorial Board believes that the simplification of repayment machinations is not nearly a big enough move to make when tackling student debt. While the gesture is appreciated, it will do little to quell the immense tide of student debt that strangles the economy and haunts students for years after their college days.