One trillion dollars. It’s hard to say it without putting a pinky finger to your lips and impersonating Dr. Evil from the Austin Powers movies.
One trillion dollars is an astronomical figure. It’s almost $30 for every man, woman and child in the USA. It’s about 1.6 billion Big Mac Combos. It’s about two album downloads for every iTunes user worldwide. With one trillion dollars in his pocket, the average person could buy more than a thousand space shuttles.
American college students already owe this figure to the government in the form of student loans.
The Stafford Loan, the most common loan available to college students in the United States was formerly issued at a 3.4 percent interest rate. That rate, combined with the relative ease of applying and receiving the loan makes it very popular with undergraduates.
But as of July 1, the interest rate was set to double, ballooning to a whopping 6.8 percent. Campaigns were launched nationwide in an effort to stop this elevation in the rate. Petitions circulated, some sponsored by MoveOn.org, begging students to make their indignation known and to convince the legislature not to let this happen.
The final legislative session before the deadline came and went and Congress went home for an extended Independence Day holiday weekend, letting the time run out.
Cha-ching.
The cost of education just went up without a vote and scarcely a whisper.
As It Was Then, So It Is Now
In 1992, while most of this periodical’s readers were worrying more about cartoons than college, the federal government introduced variable interest rates on government guaranteed student loans. The introductory rate was 6.94 percent. almost exactly what the doubled rate of today would be.
Some economic purists argue that if students paid that much 20 years ago, what’s the big deal if students today have to pay the same? The rates aren’t unheard of and weren’t considered unfair then.
The answer is simple. The money today’s students borrow buys less education than it did 20 years ago. According to Collegecalc.org, 12 credit hours in one semester at Daytona State College would cost approximately $863 in 1993. Today at $104 per credit hour, that same semester would cost $1248, a 31 percent increase.
Students have to borrow more to get the same education. More debt at a higher cost to borrow equals a ridiculous payback after graduation.
Besides the fact that something as simple as a DVD player that costs less than $50 today sold for over $1,000 just 15 years ago. Does that mean consumers should go back to paying those prices of yesteryear simply because someone once paid them? Having done something once doesn’t mean we should ever need to do it again.
That’s called progress.
Debate and Switch
Now that the Senate has reconvened with their bellies full of hot dogs and apple pie, the political fat cats finally want to take a look at the rising costs of college education. There will surely be a series of committee meetings and fact-finding hearings to determine what college students already know.
It costs too much.
One possible solution being bandied about is to tie the variable interest rate for college loans to the economy, and as the economy improves, the rate should rise. In essence, the current batch of graduates will enter the workforce and begin making and spending more money. This economic stimulus would force the rates higher, because the nation is doing better and can afford it.
Another viewpoint states that the U.S. government should abdicate all previous debt, wiping it out so all of the money once owed on the loans could be privately reinvested in future students’ education, privatizing the loan process altogether.
Answers aren’t easy to come by and good ideas are few and far between. The bigger issue, though, is that those policymakers in charge up to now haven’t seen fit to do anything about the rising mountains of scholastic debt or the students being crushed under the weight of the avalanche.
“Is it even worth it anymore” is a question no prospective or current student should ever be pushed to ask.
Editor’s Note:
Daytona State College has vowed not to raise tuition rates this academic year. On July 31, Congress and the Obama administration came to a compromise regarding student loan debt. The U.S. Secretary of Education Arne Duncan issued the following statement regarding the compromise, which some critics say will allow the federal government to earn profits off student loans:
“I applaud the bipartisan compromise reached by President Obama and lawmakers on Capitol Hill, offering relief to millions of students and families across the country. The law will cut rates on nearly all new federal student loans and save undergraduates an average of more than $1,500 on loans taken out this year. It is an encouraging step forward in our effort to keep college affordable.
“Education is a cornerstone of a strong middle-class, and keeping student interest rates low is just part of our commitment to making a college education accessible to every single American willing to work for it. As we continue to work on ways to bring down the soaring costs of higher education, we must remember that all of us share a role in ensuring that college is affordable for students and families. There is more work ahead and I look forward to joining members of both parties in finding ways to keep a high-quality education within reach for working families.”