Student Loans
- By Deborah P. Moore
- 07/01/13
Classes may be done for the summer, but many college students are wondering where they will get the money to return to school in the fall. According to the U.S. Census Bureau, between 1993 and 2011 the average student loan debt for Americans with a bachelor’s degree jumped by more than 82 percent, to $27,547. To add insult to injury, on July 1, the interest rate on Stafford loans doubled to 6.8 percent after Congress failed to pass legislation preventing the automatic rate hike. And they could stay doubled unless Congress lives up to its promise of restoring lower rates after it returns from the Fourth of July holidays. For many students this will mean working more hours or borrowing more money from their parents in order to return to school in the fall.
To look at it another way, a report in USA Today found 265 colleges and universities across 40 states where the loan default rate is already higher than the graduation rate.
One interesting solution to the tuition crisis is Oregon’s “Pay It Forward, Pay It Back” pilot project. The concept calls for students to attend public universities tuition-free and loan-free. In exchange, students would have 3 percent (1.5 percent for students who graduate from a two-year college) deducted from their post-graduation paychecks for about a quarter-century. This money would go into a fund to pay for future students. The bill, which passed unanimously on the same day that federal student loan rates doubled, is expected to be signed this month by Gov. John Kitzhaber and directs the state’s Higher Education Coordination Commission to develop a Pay It Forward pilot project for consideration by the 2015 Legislature. Initial start-up costs are an estimated $9 billion, since the first group of students to attend tuition-free are years away from their first real jobs.
There is always hope, but it may take a miracle for Congress to agree upon a plan that will allow student loan rates to drop. Hopefully Oregon’s Pay It Forward plan will provide a solution to the cost of college crisis for students and their families!
This article originally appeared in the College Planning & Management July 2013 issue of Spaces4Learning.