These words, just recently emitted by President Obama, sum up the problem with the higher education system in America these days. He’s responding to the crisis in student loan debt (over $1 trillion) and specifically to the fact that now, effective this year, interest rates are doubling for all loans – from 3.4% to 6.8%. This is catastrophic for any student who relies on loans (most do). To raise awareness, Obama is touring around the country for the next week to enforce the message that this increase is unacceptable, and that the Republican-majority Congress must lobby for students – not against them – by finding an alternative way to shore up cash. Let’s not “cut our future off at the knees”, he says, by making our students unable to afford higher education, the link to America’s future prosperity.
I agree, and think it’s great that he’s campaigning for an alternative. The irony, however, is that the 2007 bill that extended the 3.4% rate until this year was signed into law during the Bush administration, and was widely accepted by Republicans. So Congress had, at one point, been looking out for students. At present, I don’t think this is a political issue, but, rather, a forecasting issue. You see, in 2007, when the bill was passed, the recession had not yet started. The recession came a year later, and jobs were obliterated. With fewer jobs, people began enrolling in post-secondary education in droves, taking out more loans in order to pay for their schooling. Politicians in 2007 lacked the foresight to anticipate the highest rate of enrollment in the nation’s history, along with the rise in for-profit colleges and increased student loan disbursements. It’s a supply and demand narrative – when the economy turns down, society looks to other ways to recover – and one of the commonest ways to pull oneself out of the proverbial hole is the pursuit of advanced knowledge. Just as the sub-prime mortgage rate turned homeowners into debt-addled foreclosers, the student loan crisis is turning students into unemployed drop-outs…
With all this being said, let’s not look to partisan rhetoric when doling out criticism about the crisis in higher ed (its return or its affordability). After all, Obama signed the Budget Control Act of 2011 which essentially wiped out all Subsidized Direct Stafford Loans as of this year, upon which I have solely relied on to pay for college in order to remain debt-free. Subsidized loans come interest-free – as long as you remain a part-time student – and the interest doesn’t kick in until six months after you graduate. The news came to me this week after I got my financial award for 2012-3 school year – a heaping $20,000, to the tune of 6.8% interest, which begins to accrue immediately upon enrollment in the Fall. Are you kidding me? I had no clue this was in store – my university informed me in a single paragraph in my reward notice – and this has not been acknowledged in any of the recent publicity around the student loans crisis. Without the Subsidized loan, I will need to pony up a cool $3 – 6,000 in tuition each semester, all at once, lest I incur the horrible 6.8% interest rate that I cannot afford. A double in rate doesn’t matter to me – what matters is that I have no buffer, at all, to pay it off. Until recently, I was excited about going back in the Fall, knowing that I can pay off my loans as I work full-time, at peace with the fact that I will not become another poor graduate student living hand-to-mouth. My last post reeks of gullibility. How could I have been so sure I wasn’t going to be affected sooner or later?
Things have changed. I will have to consider the consequences of this law and decide whether or not I will be able to 1) finish my program on-time, due to huge lump payments I will have to make every 4 months; or, 2) actually enjoy my program with the added layer of stress that comes along with #1. I welcome Obama’s fine oration on the merits of higher education and its importance in developing a stronger nation, but in order for education not to be a luxury, we need reform, not just another bill extension or stump speech.