The life of a college student often involves seeking free food. We often forgo luxuries (like spending $12 on going out to the movies), and instead can be found gathered around a computer screen watching free TV off of Hulu.com. Students today do not have much spare pocket change. A common question among friends will be, “How can you afford to be here? How many grants, loans, scholarships, and jobs did it take you?”
Two-thirds of bachelor’s degree recipients graduate with debt, and graduates who take out loans leave college with an average of about $24,000 in debt. Even those individuals not currently seeking higher educations have likely noticed the problem (and maybe seen a couple of front pages like this one). This problem affects all of us. An investment in education is an investment in the future workforce.
As college graduates struggle to find employment, why add an increased student loan debt to their plate? Congress was given the deadline of July 1, 2012 to resolve to keep interest rates on Stafford loans at 3.4 percent, or they would double to 6.8 percent. President Obama calls this is a “no-brainer” and Congress agrees—the question remains just how to pay. While they could not agree to a long-term solution, Congress settled the deal with a compromise: they agreed to freeze interest rates on student loans for one year, allowing it to remain at 3.4 percent, and deal with the problem later.
The bill is great for borrowers this year, but there are some problems: it excludes graduate students. And it puts Congress in the same position next year, with the need to act to either maintain or increase interest rates on Stafford loans. On an optimistic note, it buys time to find real, long-term solution—and many critics of this decision will be advocating for a stronger approach to student loans in the future.