The U.S. House of Representatives voted Friday to prevent college student interest rates from doubling. Phew.
But students shouldn’t get too excited – this bill is likely to die in the Senate as it is surprisingly opposed by Democrats that disagree over the source of funding to continue federally subsidizing our loans.
It is a shame that college students are increasingly dependent on the federal government to attend college. What is even worse, however, is that the federal government’s promise of an affordable or accessible education is no longer as viable as it once was.
But the problem at hand here reaches far beyond just the interest rates on Federal Stafford loans, the undergraduate and graduate higher education loans guaranteed by the federal government to eligible students.
At the root of the issue are the stumbling “promises” of retirement, health care and education that have become unlikely and unviable for my generation. The practicality of student loans in themselves is now entirely questionable.
Congress is using the student loan issue as a political ploy to advance partisan issues during election season – Democrats essentially look to cut from oil subsidies while Republicans look to take funds from the Affordable Care Act in order to keep interest rates low.
Had interest rates been left to double, it would cost the average student another thousand dollars on top of already monstrous amounts owed.
Furthermore, it is a preposterous argument that Congress cannot “afford” this expenditure amidst its already out-of-control spending in other domestic and foreign ventures.
But in all honesty, this federal subsidy can only last so long. In an economic climate where student loan debt now exceeds credit card debt, the student loan bubble may be charging toward a point of critical mass. Tuition will only rise, debt is only going to increase and the utility of our degrees will continue to be a topic of debate.
As part of his college tour, President Barack Obama spoke to students at University of North Carolina at Chapel Hill to stress the importance of every American receiving higher education that is affordable.
“So we should be doing everything we can to put higher education within reach for every American – because at a time when the unemployment rate for Americans with at least a college degree is about half the national average, it’s never been more important,” said Obama in a conference call with student journalists early last week.
For some of you who have read my columns before, this is a familiar issue. I want to stress that the federal promise of every student attending college is dangerous, and that it is, at its core, a cultural problem when we are sending kids to school only to graduate with substantial debt and a job that previously did not require a bachelor’s degree.
Undoubtedly, students with college degrees on average receive substantially higher median salaries. But it is unclear how well one’s degree is utilized or necessary in a particular job, making that statistic one-dimensional. Furthermore, the federal promise to education has arguably only allowed universities to raise their tuition.
While state support for higher education has slipped each year, federal aid to education in the form of loans has increased 164 percent over the past decade, creating a harmful trend of high tuition coupled with high debt.
The federal government keeps awarding students various loans and grants regardless of a student’s merit, choice of major or chance of paying back, essentially eliminating a university’s incentive to keep college affordable.
At the end of the day, I highly doubt Congress will double student interest rates once the source of funding is determined, and I am between whether or not this is ultimately a good policy.
The bad policy of the past should not be placed on the youth of today but the façade does at some point need to come to a close. The federal government needs to realize its constitutional and pragmatic limitations and end an era of well-intentioned but unrealistic promises.