They say that the best things in life are free. Well, the best things might be free, but the essential things, like a college education, tend to come with quite a heavy price tag. Ready for a cringe-worthy statistic? The average cost of college annual tuition at a for-profit four-year college is $35,000, with some colleges topping the $50,000 dollar mark. Unfortunately, the average collegiette does not have that kind of cash lying around in loose change at the bottom of her backpack. As a result, student debt in America has surpassed 1 trillion dollars in the past decade. Not only is that more than Brangelina, Posh and Becks, and Bey and Jay make in a year combined, it also means that student debt in America now exceeds credit card debt. The average student, once she graduates, owes more than $25,000 in student loans.
To make already dismal matters grimmer, the job market has been suffering since the country went into recession. Finding a job post-graduation to begin paying back those student loans is now harder than ever. Students who pay for college on student loans are frequently unable to pay them back after graduation, sink further into debt, and see little to no returns on the education they have received. Many students have simply thrown their hands in the air, and decided not to attend college at all due to the costs. Not only are these students cheated out of a (figuratively…) priceless education, crucial networking opportunities, and life-lasting friendships, they also are put at a significant disadvantage in today’s already competitive job market. Obviously, none of this is ideal.
This election season, the issue of student loans and higher education reform is a hot topic among the presidential candidates. Both President Obama and GOP nominee, Governor Mitt Romney agree that a successful future for the United States depends on easier and more affordable access to higher education. However, they fundamentally disagree on the best way to achieve it.
The dog days of the 2012 presidential campaign are well under way. As candidates (and their particularly long-leashed supporters) buckle down with hard-hitting accusations against each other, it can be hard to know exactly where they each stand. We’ve broken down the most important elements of President Obama’s and Governor Romney’s respective plans for education reform. We want to help you see how their plans will affect you and figure out which one you want to support.
[pagebreak]
President Obama’s Plan
Overview: President Obama has been clear from the get-go that educational reform is one of the focal points of his administration. His plan for reform has entrusted the bulk of the responsibility of making college more affordable into the hands of the federal government. In his plan the federal government will cover students’ needs now, and attempt to make it easier for them to gradually pay back those loans later. His goal is to have the United States lead the world in college degree attainment by the year 2020.
Specifics: In 2010 President Obama signed into law the Education Reconciliation Act of 2010 It is a major, although frequently overlooked, part of Obama’s extensive, and somewhat controversial, healthcare legislation. We don’t expect you to read the entire act, but you should know a few things. The act:
Ends subsidies to bankers: Students deal directly with the federal government, rather than banks and loaners in the private sector when receiving federal money. This allows for lower and fixed interest rates on loans. It also cuts out the “middleman” bankers, meaning a hopefully more transparent process, less focused on the benefits to the lender.
Increases Pell Grant Funding: By cutting out the “middlemen” bankers, an estimated 60 billion federal dollars are freed up, and have been spent on programs like the Pell Grant, one of the largest federal grants in the system. As a result, the total size of the once underfunded Pell Grant has increased.
Decreases Required Loan Payments: Starting in 2012, only 10 percent of your income will be required each month when paying back federal loans.
Forgives Debts: Loans are forgiven after 20 years of responsible payment. Additionally, those working in public service jobs—nurses, teachers, members of the armed forces, etc.—will have their debt forgiven after 10 years.
Collegiette Perspective: “While in office, President Obama has demonstrated a commitment to helping students achieve their dreams of higher education. I support his ideas because he promotes giving students the opportunity to attend the school of their choice, regardless of their financial standing. To compete for jobs here in America and with the rest of the world, students need to have access to higher education without the burden of staggering costs. Obama has made it clear that his priority is producing a better educated country, which, ultimately, is invaluable.” – Morgan, University of Chicago ‘13
Issues: While many have praised President Obama for his efforts in education reform, his plans have received many criticisms as well. Obama’s reforms cost quite a bit of cash, which, as we all know, doesn’t grow on trees. Without the aid of the private sector, the financial burden of funding student loans falls to the government, i.e., the taxpayer, i.e., you.
Obama’s reforms also encourage more and more students to borrow more and more money for their education. As more students borrow money, the federal government loans more and pours more money into the college system, creating an incentive for colleges to drive up their tuition costs. As tuition costs continue to rise, students borrow more. In short, it has become a vicious cycle.
[pagebreak]
Mitt Romney’s Plan
Overview: Former Massachusetts governor and GOP presidential nominee Mitt Romney’s plan to reform higher education is almost a complete 180 when compared to the incumbent’s. Romney wants to shift student loan responsibility away from the federal government and in turn structure it into a shared duty between students, their families, the federal government, and the private sector. Romney advocates giving students the information and opportunity to find the best college and borrowing plan that suits them upfront. This will enable them to understand their loans, pay them back, and relieve the federal government of the burden of defaulted loans.
Specifics: Romney has named his steps to education reform in A Chance for Every Child. In it he details his “plan for restoring the promise of American education.” He commits to several changes in his plan, including:
Getting students the right information: Many students default on their loans because they did not understand their loans in the first place. Romney plans on providing students and their families with clearer and pertinent information about their options when borrowing money, including loan repayment rates. This way, students can understand their obligations as borrowers upfront and can weigh their options discerningly before borrowing.
Eliminating duplicative programs: Programs essential to federal loaning have undergone cuts in order to accommodate their increases. The Pell Grant, for example, no longer provides subsidized loans to graduate students because of its size increase under President Obama. Romney plans to save crucial pieces of programs like this one by reorganizing fiscally shaky programs and stopping unnecessary increases and overspending.
Involving the Private Sector: While Obama has advocated for a primarily federal responsibility of student loans, Romney is campaigning for larger private-sector involvement. He is in favor of unburdening the federal government from the trillion-dollar cost of student debt, and giving the private sector some of the fiscal responsibility. Under Romney, the private-sector would aid the federal government in “providing information, financing, and education itself…to support the goals of students and their families.”
Collegiette Perspective: Mitt Romney’s plan for higher education reform would not only alleviate student debt, but it would also begin to balance the government’s budget and get this country out of debt. A Chance for Every Child is a good long-term solution because it really focuses on the root of the problem and how to fix it now and in the future, rather than just spending more of the government’s money on programs that have not been working.” – Kendall, University of Virginia ’15
Issues: The main objection many have to Romney’s proposals is that they require significant cuts in funding. While Romney streamlines student loan reform programs, the requirements to be eligible for loans will become much more stringent. For pre-collegiettes and those considering graduate school, this means that your choice may be less directed by where you want to attend, and more directed by where you can afford to attend.
Additionally, entrusting control of student loans to private companies is risky because their loaning systems are driven by their own interest as a company. Private-sector loan interest rates are not fixed and can rise quickly. Generally, private lenders tend to be less flexible with repayment times or missed payments, which can have long-lasting consequences on your credit.
So why should you care about all of this? In between studying, partying, becoming the world’s future leaders, rushing sororities and rushing to class, it is easy to forget that someone is eventually going to have to foot the bill for your collegiette experience. Student loan debt has become a serious issue in the past decade in the United States. The direction of the issue is entirely dependent upon the leaders of this country. When you’re headed to the ballot box to exercise your democratic rights, consider how the plans of each candidate will affect you, and how your vote can make a difference.
We at Her Campus want to make sure your vote is informed, and not just based on the fact that Romney’s VP is a total catch, or that Obama is friends with Dwayne Wade. Although, as far as we’re concerned… those things certainly don’t hurt anyone’s chances…
Let us know your thoughts about the candidates’ positions on student loans in the comments!