The Village

  • The Student Loan Debt Problem

    Aug 26, 2013. Written by Terrol Graham

    On August 23 as I was in transit from Kingston, Jamaica to Orlando, Florida, an interview of President Obama aired on CNN’s New Day. I saw the interview on a 6 a.m flight to JFK as I was returning to Connecticut for the second year of my masters. President Obama’s remarks on the student loan crisis intrigued me. I had just spent a significant portion of my summer wrangling with my school’s financial aid office and it culminated in a $9,500 grant being replaced by loans in addition to the loans I was already taking out for the year and my previous year of graduate school. I’m by no means complaining because I’ve been fortunate where student loans are concerned. But I do know that when considering job offers after graduating in May, I will have to pay considerable attention to the salaries that are being offered because of my student loan burden. I’m planning on going the public service route, and as most people know, this is not the most monetarily rewarding of fields. It will be a challenge.

    For a first generation college student who is also an immigrant, understanding the student loan process has been somewhat of a challenge. There are a couple mistakes that I made along the way that I’ll be able to warn my little brothers and younger cousins about. I think in many ways schools can do a better job of explaining to students and their families about what they are signing up for when they take out a loan. Projections of what repayment will be based on one’s potential salary would be helpful even before the loan papers are signed. I didn’t learn about the problematic nature of loan repayment until the 2012-13 school year while I was studying in Denmark on a scholarship. I had taken a leave of absence from my home university but was required to start repaying my student loans even though I was enrolled in school, albeit in another country, and a non-degree granting program.

    “I’ve been talking about the need for us to build a strong middle class and ladders of opportunity into the middle class. And nobody disputes that a higher education –in some form, two year, four year technical college—is a necessity in a 21st century knowledge based economy.” -President Obama.

    The President’s sentiments echo that of Nelson Mandela: education is the great engine of personal development. It is through education that the daughter of a peasant can become a doctor, that the son of a mineworker can become the head of the mine, that a child of farmworkers can become the president of a great nation.” In my own family I’ve seen the importance of education as the engine of development. My grandfather was a farmer in rural Jamaica and my Grandma is a market woman; they both insisted that my father along with his siblings “take to the book.” As a result, my generation has benefitted and the majority of us have had opportunities opened up for us that our parents never had and are generally better off than many other Jamaican families. It was all through education. Of my father’s nine siblings, the ones who are doing the best financially were the ones who were able to attend university.

    “But when you have over the last decade or so tuition going up 260 percent and family incomes are going up 16 percent, that’s unsustainable.” -President Obama.

    The president hit the nail on the head. There has to be a way to control costs. In the realm of state universities, state legislatures should act to keep college costs down. This task would be much harder with private universities. It is now that Americans must ask are these private universities with such large endowments in excess of a billion dollars with so many income streams such as research dollars etc. really non-profit entities? Is it time that they now be taxed?

    Take a look at what college presidents and some administrators are paid for doing jobs that are largely sinecures; it would be well within one’s right to question why many of these colleges and universities are tax-exempt. A few congressional hearings and the threat of tax exemption removal or some form of tax maybe not at the corporate tax rate, but something nevertheless, will bring these colleges to the bargaining table. In hard economical times, tough decisions have to be made. A cost of attendance freeze across the board for a five-year period while the student loan bubble is being addressed would be propitious to the overwhelming majority of Americans.

    In what form student loan relief will come, no one knows for sure, not even the president. I was amazed by the tertiary education system in Denmark: students study for free and receive monthly grants of approximately $1000 to cover living costs. I have a friend currently studying in New York and he still gets his SU (monthly grant) to help defray the cost of the LLM he is pursuing. I know a system like this could never be transported to the US wholesale, but maybe something similar could be done in one of the smaller states. There is also something to be gleaned from the German and Norwegian models as well. But I think the most promising scheme that the United States should look into replicating is that of the state of Oregon.

    “State legislatures have to put money where they say their priorities are.” -President Obama.

    Oregon has definitely done so. Oregon’s “Pay it Forward” plan makes it possible for the state’s high school graduates to attend state colleges and universities for free while pledging 3 percent of their future income into a fund for a duration of 20 years to pay for the tertiary education of future Oregonians. Furthermore, I look at it as a policy lab, other states can look at Oregon’s experience and follow suit by duplicating what works and tweaking what doesn’t. It and the Student Loan Fairness Act are certainly promising avenues to venture down if solving the student debt crisis and expanding affordable education to all Americans if they desire it are the goals.