[Representative Schiff] Students Deserve Fair Shot at Affordable College Education
I recently experienced the joy—and anxiety—of seeing my daughter earn her driver’s permit. And as much as I try to deny it, I know that the day when she heads off to college is not far off.
That reality for both parents and students is daunting. (No, not learning to drive or trusting their child behind the wheel, though that’s daunting too.) But, rather the prospect of earning an expensive degree, graduating into an uncertain job market and bearing an increasingly unmanageable level of student debt.
Cost remains the biggest barrier blocking students from a college education.
Not surprisingly, the student loan default rate continues to rise while wages for full-time workers fall or stagnate. Americans owe an astounding $1.2 trillion in student loan debt, the second-highest form of consumer debt behind mortgage debt.
Economists have reported that this debt crisis poses a risk to our economic recovery as an increasing number of individuals must use a larger portion of their wages to repay their debts instead of buying homes, cars, and participating in other kinds of consumer activities that help to stimulate economic growth.
Something must change. Students are not looking for a bailout from the government—they are merely seeking a fair chance at an education that will lead to gainful employment and allow them make contributions to our society. Rather than attempting to balance the budget on their backs, our economy depends on helping students thrive.
This starts with allowing eligible student borrowers to refinance their federal loans the same way that homeowners do with their mortgages. In 2013, Congress prevented student loan interest rates from doubling but this was only meant to be a temporary solution.
We should implement a long-term fix that allows past student borrowers to refinance high interest rate loans to the current lower rates in effect for new borrowers enacted by that same 2013 law—3.86% for new undergraduate borrowers and 5.41% for graduate students.
This proposal would also save taxpayer money by allowing the government to buy back Federal Family Education Loans (FFEL), which were issued by private banks and backed with government guarantees against default and interest subsidies starting in the 1960s.
While the FFEL program ended in 2010, the government remains responsible for an estimated $243 billion in outstanding FFEL loans which were issued to nearly 12 million students over the last decade and are still in the process of repayment. Making this change may yield savings that could instead go towards boosting federal need-based aid such as the Federal Pell Grant program. This, in turn, will help many new students avoid such crushing debt in the future.
When I graduated from law school, I had student loans at 10, 12 and 14 percent interest and for the next 10 years, my loan payments exceeded my rent. But education costs were markedly less then, and I went into a field where I could handle the debt. This will not be the case for many students today who will have much greater debt and may pursue fields that are less remunerative.
Our preeminence in an increasingly competitive worldwide economy relies on keeping the doors to higher education wide open to all students and allowing graduates to choose fields they are passionate about and take risks. This will require a concerted effort to bring down the costs of higher education and the debt that often goes with it.
I envision a bright future for the next generation of young people—my daughter included—but we can’t expect to get there without making some fundamental changes to address the growing student debt crisis.
Students deserve a fair shot at an affordable college education. Our economy and their future depend on it.
Congressman Adam Schiff serves in the U.S. House of Representatives and represents Los Feliz, Silver Lake and many of the surrounding communities.