Editorial: United States must address exorbitant student loan debt
In 2013, the non-profit organization, American Student Assistance, released a scathing report concerning the growing costs of obtaining higher education in the United States. The ASA points out that in 1985, when tuition costs for a four-year in-state public university was an average of $1,318, the total outstanding student loan debt was $35 billion. Today, the average tuition payment to attend a four-year in-state public university sits at $8,665, which leaves the two-thirds of university students who borrow to pay for their education with an individual average student loan debt of $26,600, and has resulted in 38 million borrowers owing an outstanding $1.1 trillion in student loan debt. On April 14, 2014 the Congressional Budget Office released its Baseline Projections for the Student Loan Program which, as Shahien Nasiripour of the Huffington Post points out, includes an expected profit of $127 billion for the federal government over the next 10 years.
Unfortunately, rather than spend those billions in profits on fixing the issue of exponentially increasing tuition costs and graduate default rates, the federal government will continue to use student loan debt as a revenue stream for agribusiness subsidies or defense contracts, as Sen. Elizabeth Warren (D-MA) put it. In an interview with VICE News' Mary O'Hara, President of the ASA Paul Combe posed the $1.1 trillion question: "what is the impact on our economy when a third of the credit of all these students who graduate and are normally the consumers - who would otherwise buy homes and buy cars - is already eaten up by student loans?"
Concerns over student's ballooning debts is not shared just by public officials and nonprofit organizations. A Federal Advisory Council staffed by various bank chief executives issued a report in September 2013 that warned student loan debt has taken on the same pernicious qualities exhibited by the subprime-housing crisis of 2008. Former World Bank Chief Economist Joseph E. Stiglitz continued on in an Op-Ed for the New York Times that 17 percent of graduates have outstanding debt over $50,000 and over 30 percent of student borrowers are 90 or more days behind on their payments.
Stiglitz continues on to point out that the U.S. is unique among industrialized countries when it comes to saddling its students with inordinate tuition costs and draconian loan schemes. He concludes that America should adopt a loan payment plan akin to that of Australia where a system of publicly provided income-contingent loans are made to all students, which are then repaid on an individual basis of that student's income after graduation. Regardless of the exact specifics of any such plan, the US government cannot afford, quite literally, to continue profiting off the burgeoning debts of its students.
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