What games are the Congress and the Obama Administration playing with student loans?
By Roger Caldwell
“In a global economy putting a college education within reach for every American has never been more important. But it’s also never been more expensive. That’s why today we’re taking steps to help 1.6 million Americans lower their monthly student loan payments,” said President Obama on October 2011. Now on July 1, 2013, student loans will double from 3.4 percent to 6.8 percent if Congress doesn’t act.
The student loan is a federal subsidized “Stafford Loan” which will hurt 7 million college students nationwide, and devastate Black and Hispanic students. Students of color are having trouble repaying their loans on time, and their debt is increasing. Blacks are graduating from college with loan debt levels starting at $30,000, and many are not able to find a job to repay their loans.
Student loans have surpassed credit card debt and many think our lawmakers like the revenue and profits that come from student loans. Both parties keep submitting plans, which they say will control students loan payments, but none of the plans lower student payments.
In the past five years, the nonpartisan Congressional Budget Office says, the U.S. Government has booked nearly $120 billion in profit from student borrowers and their families. During the next ten years, it is projected that the government would generate $184 billion in profit from student loans. Student loans are the largest expenditure for a family after a mortgage, and college education is big business for the federal government.
As the country gets closer to July 1st, there will not be any fundamental changes to help lower the cost of student loans. At this point, if a Stafford Loan is not subsidized, its rate is already 6.8, and this information is not promoted or publicized. Our lawmakers are playing games with our minds, because the system is broken and no one is trying to fix it.
There is also something wrong according to Huffington Post, when 53.6 percent of all college graduates in 2012 cannot find a job, or are underemployed. Tuitions are continuing to rise and college education or some form of higher education is needed to get a good paying job.
Last week President Obama made his case in the Rose Garden flanked by college students that Congress must prevent an increase in student loans. But this public relations campaign appears to be a good photo-op, because the government is positioned to make a big profit on students’ loans. It appears that Congress is not listening and there is too much confusion in both the parties to get a bill they can agree on.
Black and Hispanic students will be the hardest hit with the increase in the rate of student loans and Pell grants will significantly be cut. Thousands of Black and Hispanic students will not qualify for loans in 2013 and 2014 school year, and many HBCU’s will find it difficult to pay their bills with smaller enrollments. The gap between students of color and white students will increase, and access to social opportunities will diminish.
In 2011, the President was talking about making a college education more affordable, but in 2013 student loans will probably increase. An increase in student loans will make the cost of college skyrocket and more students of color will be forced to drop out of school.
College education will soon be a privilege for the upper class, if the decisions are based only on market rates and profits. Colleges and universities boards are only concerned with their profit margins and keeping their tuitions high. If President Obama is truly dedicated to lowering the cost of a college education, he must force state universities to lower their tuitions, and giving more students an opportunity to complete their courses on line at a reduced cost.