Editor's Note (The View From Here)
Student Loan Debt
- By Deborah P. Moore
- 06/01/16
Being given “help” is not always helpful. That
is the story being told by many who have student
loan debt — a problem for all, but a bigger problem
for those who dropped out before they finished. Today’s
students are forced to borrow more than ever
before to finance their education. The White House
estimates that nearly 70 percent of bachelor’s degree
recipients leave school with debt. The Consumer
Financial Protection Bureau also estimates that one in four borrowers is
either in delinquency or default on a student loan. Outstanding student
loan debt is second only to mortgages and has now surpassed credit card
debt. While the rate of default on mortgages and credit card debt has decreased,
the rate of default on student loan debt is on the rise. This creates
a problem not only for the student, but also for the parents who co-signed
a loan and the taxpayers who are footing the bill.
Currently, total outstanding student loan debt in the U.S. is approximately
$1.2 trillion. Most are loans held by the federal government. Add
to that monies invested in federal grant programs. In the past 10 years,
total federal grants rose 110% — from $22,017 in 2004-05 to $46,160
in 2014-15 (in 2014 dollars in millions). In the 2014-15 award year, President Obama raised the
maximum Pell Grant award to $5,730. This is a nearly $1,000 increase
since 2008. And in this same time, the number of Pell Grant recipients
has expanded by 50 percent. There has been an investment made in
education, but the question is… has there been an adequate return?
For some, the answer is yes. According to the National Center for
Education Statistics (NCES), the employment rate was 89 percent for
those with a bachelor’s or higher degree. But, only about 60 percent
of students who began seeking a bachelor’s degree at a four-year
institution in Fall 2008 completed that degree within six years. Some
took longer for their degrees, some changed institutions, but many
never completed their education. Degree or not, many students don’t
understand what owing tens of thousands of dollars in loans will mean
after they graduate. Lack of employment or under-employment has
left many carrying debt that they can’t or are unwilling to pay. The
two-year cohort default rates for all borrowers entering repayment in
2011-12 was 14 percent; 24 percent for borrowers who did not graduate.
With income-driven programs being put into place to help solve
the student loan dilemma, the problem has not gone away. The risk
has been shifted from borrowers to taxpayers. I wish I had an answer
to the growing student debt problem, but I don’t. The idea of throwing
money at a problem and not addressing the issues is hurting students
and our nation’s economy, not helping.