College Loans: Any Solution?
Obama’s proposals to make college education more affordable constitute a controversial issue. Valid arguments can be made on both sides. The Obama administration proposes to reduce the interest rates and have graduates pay no more than ten percent of their incomes. The balance of the loans would be forgiven after twenty years. Opponents argue that these proposals add to the huge budget deficit because the taxpayers would be stuck with the debt. The opponents place the blame on predatory lenders and the rapid and inflated growth of college tuitions, which leads to possible loan defaults or even bankruptcy declarations from borrowers.
The Obama Administration has initiated a new program called “Pay As You Earn”, which is where your income versus the amount you pay comes into play. Along with this the Administration has stated “The new “Pay As You Earn” proposal will allow about 1.6 million students the ability to cap their loan payments at 10 percent starting next year, and the plan will forgive the balance of their debt after 20 years of payments”, which is only the beginning since there are many more borrowers that will seek benefit from this program. The reason why they have launched this new program according to the Administration is because “College graduates are entering one of the toughest job markets in recent memory, and we have a way to help them save money by consolidating their debt and capping their loan payments. And we can do it at no cost to the taxpayer”, at least that is what they are hoping to accomplish with this. Unfortunately there are a number of experts who oppose this program whose reasons will be expressed thoroughly.
Learning about Learning When I was ready to re-enter the workforce, I found that I was lacking in many skills needed for finding a position in an office. Coming to the realization that I would need to find a place for myself in the workforce was stressful enough, not to mention that I was under skilled by today's standards for an office worker. Upon searching my options, going back to school ...
Anya Kamenetz, author of “The Edupunks’ Guide”, mentions how over 36 million Americans hold over 1 trillion dollars in student debt combined. That is around 8 percent of our national debt as a country just in student loans. Kamenetz agrees with Baum in the sense that the program proposed by the president does not help people who defaulted on their loans. An even bigger issue that Kamenetz emphasizes is not just the student loan crisis, but the rising costs of colleges in general, which encourage people to take out an obnoxious amount of student loans. Focusing on institutional costs, private schools rise, but so do public schools and the average rise for them was a whopping 8.3 percent in tuition increase. This not only is concerning to myself, but also to many people out there seeking an affordable college education. It seems as if the higher education cost seem to increase despite the economic crisis this as well the slow job market. The argument continues explaining who will suffer the consequences of this pogram.
Neal P. McCluskey, author of “Feds in the Classroom: How Big Government Corrupts, Cripples, and Compromises American Education”, holds a neutral view almost on this matter. There are two sides to this fence. On one side you have the 30 percent of the population who is currently holding student loans that will benefit from this and on the other you have the 70 percent who also hold student loans, but will not gain nearly as much from this program. One thing he does stress is the ultimate people that will suffer, the taxpayers. Where is the money to write off all of this debt after 20 years coming from? The taxpayers. At the same time McCluskey blames the people who took out the loans in the first place for being reckless by paying “too little attention to their costs” and if the government would make that debt go away all of sudden, we would have an economic disaster approaching us. This brings up another argument regarding lenders.
When hearing the word “debt” many individuals may cringe to the sound of the word. The United States debt has increased tremendously in the past few years with a record 10.7 trillion in 2008. The debt continues to grow year after year making taxpayers poorer and foreign holders of the United States bonds richer. The more increase on expenditures and less GDP the United States generates will cause ...
Cindy Warner, a coordinator for StudentLoanJustice.org, brought up the topic of predatory lending by these private lenders to the students. She claims that Obama’s plan does not do anything to protect students from “Draconian fees and penalties under the auspices of financial aid”, which in turn just have an interest increase to put any person under more debt if they fail to pay it off in due time. Warner also mentions the fault that a person will still not be able to include their loans if they were to declare bankruptcy. Warner also brings up the issue that these debts are given to different collection agencies to collect from people giving the example of Sallie Mae, a student lender who was for-profit, charged students predatory rates without consent. This leads to some speculation as to what the repercussions for private lenders may be if this program is executed.
Richard Veyer, the director from Center for College Affordability and Productivity, has given his opinion on this issue as well. There is a belief in him that the president is using more power than he is given to enact a reform on student loan debt. He brings up an issue of some private lenders and loans they give out for non-educational purposes, arguing that they could be put in jeopardy if the government begins to interfere in loan contracts. When the government begins to interfere in non-related loan issues, that is taking it too far and I highly doubt that Veyer’s paranoia is really something to be worried about. The government interferes nowadays only in certain situations. The government knows the difference between educational loans versus a private loan used for other purposes. Veyer’s fear is that the government will disrupt non-educational related contracts, which is highly unlikely due to the fact that the government only wants to attack the predatory loans given towards a college education. What I do agree with is the fact that there should be a strategy to slowly encourage young adults from going into debt by taking out ridiculous amounts of student loans.
With the government’s recent plan to lower undergraduate debt, it sounds as though it could be a potentially great idea as agreed with only one of the economists, Sandy Baum, who have voiced their opinion on the subject at hand. Unfortunately, college costs have more than quadrupled with inflation, making it more and more difficult to attend college without taking out ridiculous loans to pay for that education. Sandy Baum addresses the fact that there is a problem with the loan system from not being able to pay back loans due to unemployment to possibly discharging loans through bankruptcy. Bankruptcy is declared when one’s debts are too high and the job they are doing is simply not going to pay them off. The government will write off all of that debt at the cost of one’s credit being destroyed when a person is unable to pay their credit loans. College loan debt is not a viable option to get written off if the debt gets too high.
Going to college has been taught to be the next step in education after graduating high school but is it truly that easy? The main factor to attending college now is the money issue. In today’s generation receiving a scholarship would be the best way to get through college without the burden of student loan debt piling up as you get further into college. Even though financial aid is available for ...
Although the proposal from Obama’s Administration has a possible solution to a slowly growing issue in the United States, there are some who oppose it because there are bigger issues that need to be addressed before fixing the college loan crisis. Many think because this will add to a growing deficit that the government should focus on lowering instead of adding to it with this plan. As a college student, this bill would directly affect me as well as many other students I know who are currently taking out loans.
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A student web portal would allow UC Berkeley students to access online campus services, websites, and course information from one convenient location, using a single user ID and password. They would be able to customize the portal to their own liking, adding or deleting links to internal websites, internal news channels aimed at particular groups of students, and external information such as ...
“The Worst Lesson We Could Teach – Room for Debate – NYTimes.com.” The New York Times – Breaking News, World News & Multimedia. N.p., n.d. Web. 17 Nov. 2011. .
“We Can’t Wait: Obama Administration to Lower Student Loan Payments for Millions of Borrowers | The White House.” The White House. N.p., n.d. Web. 26 Nov. 2011. .