Will Congress Cap Student Borrowing?
Parents, Students Bear Growing Debt Burden
(Washington, D.C.) – In recent years, some in Washington have pushed to expand the ability of young people to borrow in order to pay for higher education, without offering significant proposals aimed at bringing down the cost of colleges and universities. With the economy slow and job opportunities hard for many to find, graduates are finding it increasingly difficult to repay their student loan debt. Now it is reported that with the encouragement of the federal government, parents too are going deep into debt to pay for their children's education costs. With overall student loan debt now topping $1 trillion, Senate leaders are expressing concern about the ability of young people just entering the workforce to pay these debts. There is discussion in Washington about capping the overall amount of money that can be borrowed to pay for school. And policymakers are considering what portion of this debt will be passed on to the taxpayers.
Some Senate leaders believe it is time to place limits on loans before student debt causes an economic crisis. Their concern is not unfounded, since 1985 tuition costs have risen approximately 500 percent, with the federal government funding 43 percent of student loans in the 2012-2013 academic year. With the current student loan default rate at 10 percent – a record high – many are wondering if the Administration's "pay as you earn" plan may ultimately lead to a large, taxpayer-funded bailout.
Daniel Garza, Executive Director of The LIBRE Initiative, released the following statement:
"America's young people are already suffering under the strain of a stagnant economy that prevents many from using their hard earned education to begin to build a better future. Instead they're saddled with exorbitant student loan debt as the cost of a college education continues to rise. And instead of finding a way to restrain costs and make college more affordable, the federal government continues to provide new subsidies to higher education, paid for with student borrowing and taxpayer funds. It's time to carefully review this entire system to ensure the interest of students are served.
Young people should have a range of affordable options for acquiring the skills they need to succeed in the 21st century workplace. When parents and students are pressed to take on thousands of dollars in student debt – only to find themselves with no good job options – something is fundamentally wrong."