More than half of all student loan borrowers are concerned they will be unable to repay their debt, according to a paper released today by the Urban Institute, a Washington think tank, using data from the 2012 National Financial Capability survey. The report found that 57 percent of all student loan debtors are concerned about repayment, and 9 percent of student loan borrowers never attended college at all — either because they borrowed for vocational certificates or because they borrowed on behalf of family members.
WASHINGTON — With less than a week remaining until the interest rate on new, federally subsidized student loans is scheduled to double to 6.8 percent, President Obama will take borrowers' questions about student loans via text message, the White House announced Monday. Obama will pick one question to answer per day.
WASHINGTON -- With 10 days remaining until the interest rate doubles on new, federally subsidized student loans July 1, a bipartisan group of senators is said to be working out a compromise -- but whether a bill that can pass both houses of Congress is achievable before the rates increase is still unclear. The compromise would base interest rates on the 10-year Treasury note (as would plans from Senate and House Republicans and from President Obama). Rates would vary from year to year for new loans, but would be fixed over the life of the loan -- as was the case in Obama's plan, and in the Senate Republican proposal. The plan would cap interest rates at 8.5 percent.
It's unclear whether the plan will catch on broadly among Senate Democrats, who have resisted shifting to a market-based rate and instead advocated for a one- or two-year extension of the 3.4 percent rate so that Congress can tackle the issue when it reauthorizes the Higher Education Act, which expires at the end of next year.
WASHINGTON -- Education Secretary Arne Duncan told members of the Senate Budget Committee on Tuesday that he was "hopeful" a deal could be reached to prevent the interest rate on new federally subsidized student loans from doubling in less than two weeks. The hearing was on the administration's budget request for the 2014 fiscal year, which included a plan to switch to a market-based interest rate. Some Democratic senators expressed skepticism about the plan, saying they don't want rates to increase above current levels, while Republicans said their plan -- introduced before the administration's budget request -- was very similar to the president's. "I think there are some differences, but I think they're resolvable," Duncan said. "I am very hopeful that this can get done."
In a letter to the Consumer Financial Protection Bureau on Monday, consumer advocacy groups, higher education associations and others asked the bureau to require that colleges give prior approval before students borrow private loans, saying that the bureau has the power to require full certification by institutions. Right now, students "self-certify," meaning they sign off on a form that includes information about federal student loans and other forms of financial aid. Requiring colleges to certify that they are aware of the loans, the groups argued, would help ensure that students have already maxed out their federal loan options (many private loan borrowers have not), because federal loans usually offer lower interest rates and more flexible repayment options than private loans.
It is high school graduation time, and some columnists here in California and nationally, in platforms such as Forbes and U.S. News & World Report, seem to be heralding in the season by carrying articles questioning the value of a college education. They report record unemployment levels among recent college graduates as the rationale for pursuing a trade right out of high school rather than pursuing a college degree.
What such articles fail to report is that the best insurance against unemployment is a college degree. A review of Bureau of Labor Statistics data tracing educational attainment and unemployment for all recessions since 1981 suggests that adults with a college education were twice as likely to be employed as those who had earned only a high school diploma. The logical claim is that education is an investment that pays off.
One recent article in our local newspaper, "College enrollment down, experts cite low funding, high cost” quoted Richard Vedder, director of the Center for College Affordability and Productivity, who, on a recent trip encountered a parking lot attendant and bellman, both of whom had earned college degrees, certainly not required for their jobs. His take was that their "financial return on a college investment was negative."
Vedder drew the wrong conclusion. During recessions some college-educated adults are forced to take jobs beneath the levels for which they are professionally qualified. But one cannot make the assumption that this is true for the majority of college graduates. Recessions have the tendency to exert top-down pressure on the workforce, squeezing the less-educated and less-experienced out the bottom and into unemployment.
Within the last two weeks National Public Radio broadcast a Planet Money segment which contained sound bites from a trio of national figures – Ellen DeGeneres, Mayor Michael Bloomberg, and Oprah Winfrey - delivering commencement addresses. All ardently urged the new graduates seated before them to "follow their passions."
I would encourage them to do just that, follow their passions … but tempered with pragmatism. Also I would recommend that academic advisers, coupled with an institution’s career advisrs, coach students to select majors and possibly minors that offer the student the opportunity to pursue both passions and careers. That way students can have their cake and eat it, too.
"What if you don’t have a passion?" asked the exasperated student interviewed in NPR’s story. College is a wonderful place to develop or focus passion. Yet in this era of global economic stress, it is tempting for students to home in on a career early during their matriculation. Academic and career advisors should be vigilant in helping students and their parents, who are likely to be pressuring them into an early decision about an occupation, to avoid that trap.
All students need a healthy dose of learning opportunities that build the skills and capacities that will support them as their professional and personal lives unfold. That is one of the purposes of the liberal arts, that broad curriculum that pundits love to hate. We must be more effective in communicating the value of the liberal arts, not just in capabilities and perceptions, but in jobs and in dollars and sense.
Journalists and "experts" who say nay to the value of a college education are doing millions of high school and college students a gross disservice. They are robbing students of the best hope of developing and pursuing their passions with careers, each in a civically responsible way. Shortsighted reporting on this undermines the national security of the country by limiting its ability to develop the human capital on which the future of the United States depends.
Devorah Lieberman is president of the University of La Verne.
WASHINGTON -- Two dueling bills to avert an increase in the interest rate for new, subsidized federal student loans July 1 both failed to advance in the Senate on Thursday, illustrating the divide between the parties on how best to avoid the rate hike. A Republican bill to set the interest rate based on market rates failed, 40-57, although it was similar in many ways to President Obama's original solution in his 2014 budget request. A Democratic bill to freeze the rate for subsidized student loans at 3.4 percent for two years won a slim majority, 51-46, but didn't get the 60 votes needed for procedural reasons.
While the Obama administration has long favored a long-term solution based on market rates, Obama endorsed the Democratic bill for a short-term fix, saying averting the rate hike is the most important factor.