EDITORIAL: Student loans shouldn't be school of hard knocks

2013-06-14T00:00:00Z EDITORIAL: Student loans shouldn't be school of hard knocks nwitimes.com
June 14, 2013 12:00 am  • 

The high load of student debt — almost 1 in 5 adults in the United States owes money on student loans — should concern everyone.

But worrying about this being the next big economic bubble, the way housing and banking were just before the start of the Great Recession, doesn't mean this $1 trillion bubble has to be popped immediately.

Republicans have proposed variable interest rates on Stafford loans, linking them to 10-year Treasury notes. Democrats want to keep the current rate in place for two more years pending a comprehensive overhaul of student loans.

Interest rates on student loans are set to double to 6.8 percent on July 1 if Congress doesn't act to stop that from happening.

Republicans and Democrats share a desire to prevent that big jump in student loan rates, but because both factions have differing views on how to address the problem, conventional wisdom in this political climate says their shared goal won't be accomplished.

Current college students would see their rate on future Stafford student loans double, from 3.4 percent to 6.8 percent, and so would graduates refinancing their student debt.

This is how Americans suffer from the political dysfunction in the nation's capital.

Employers increasingly demand college degrees for entry-level employees, yet tuition and other college costs have risen much faster than the consumer price index. Students must borrow money to get that important degree to launch their career.

And now Congress appears poised to make life even tougher for those students.

The failure of Congress to address the student loan issue — whether to gradually phase in higher rates or to keep the lower rates in place while negotiations on a solution continue — is a major failure of ensure the American Dream remains accessible

Financial and career counseling for high school students should be mandatory, so they enter college with eyes wide open, but provide loans on terms that are clear and affordable.

Congress needs to work harder to resolve differences so student loans will remain affordable. 

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