By Stephen Dash With imminent implications of the student loan crisis affecting many Americans, the immediacy of the student loan crisis warrants it being an issue at the forefront of political discussion. Though student loans have long been weighing down graduates, student loan debt has now surpassed $1.2 trillion, doubling just since the financial crisis, compounding the depth of the burden on many Americans. Federal loan debt now comprises 45 percent of the federal government’s assets, but with new studies claiming a delinquency rate of nearly 32 percent, much higher than previously estimated, both federal and private student loans now pose a threat to the U.S. economy.
Both President Barack Obama and Congress have taken proactive measures to help address the issue. The president put forth the Student Aid Bill of Rights, seeking the four major components: affordability of college for all students, accountability for loan services, an organized complaint system and communication between those who hold the loans and those who service the loans easier. Versions of this proposal by the president have been introduced into both houses of Congress and are in committee.
In the last year alone, Sen. Elizabeth Warren, D-Mass., has thrice introduced legislation that would allow students to refinance their federal loans at current rates, much lower than they were in previous years. Much of the opposition to this bill was the way in which it was going to be financed: further taxation those who earn between $1-2 Million. Another bill introduced in March by Sen. Sheldon Whitehouse, D-R.I., now in committee, proposes to allow the discharge of private student loans in bankruptcy, treating it the same as other private unsecured debt.
The highly charged topic has already begun to bleed into the presidential race, with the congressional candidates running having addressed the issue while in office.
While Republicans readily admit that the student loan burden that many Americans carry is one of concern, how to pay for relief as well as views on oversight of the private sector have presented obstacles. Sen. Marco Rubio, R-Fla., is likely the candidate most proactive on student loans while serving in the Senate. Having incurred more than $100,000 of student loan debt himself, he’s introduced or co-sponsored numerous bills geared towards the transparency of universities and lenders as well as graduate-friendly repayment options in the last several years in the Senate. Now a candidate, he has also outlined the right to information prior to taking out student loans as part of his presidential campaign. Other candidates Sens. Ted Cruz, R-Texas, and Rand Paul, R-Ky., have voted in favor of cuts to Pell Grants, which assists students considered low-income, during their time in Congress.
Democrats are, broadly, more likely to be pro-borrower. Former Sen. Hillary Rodham Clinton has long supported the reform of student loans. During her time in the Senate, she repeatedly introduced and voted in favor of measures that would allow wider access to college, revised repayment and forgiveness plans, as well as being in favor of more rights for the borrower. It is anticipated that she will be announcing a student debt plan soon as part of her policy platform. Democratic congressional candidate also in the race is Sen. Bernie Sanders, I-Vt., who has repeatedly called for student loan reform during his time in office, including two free years of state college, a 55 percent reduction in college cost and refinancing the loans of those who have already graduated at a lower interest rate. Most recently, he announced his College for All Act, proposing free tuition to all public universities and colleges nationwide.
Though Congress, and its present and past members running for the highest office in the country have all in different ways tried to address the student loan debt, progress toward true reform is at a standstill. We have yet to see a comprehensive plan that addresses all of the facets of the student loan crisis: affordability and transparency for those yet to start or in the midst of college, and how to address the needs of those who’ve graduated and are struggling or unable to pay the loans. The heavy burden of student loans that so many graduates bear and the government’s significant amount of assets tied up in federal loans makes it a pressing issue affecting the health of the nation’s economy. The initial actions by Clinton and Rubio as well as their competitors will hopefully bring recognition of the urgency of the issue into the spotlight of national politics so that real progress can get underway. The American people and the economy deserve and need to have this issue addressed.
Stephen Dash is the founder and CEO of Credible, which enables college students and graduates to compare personalized loan offers from multiple lenders in one place.
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