Student loans serve an important function in American education—namely by enabling middle- and low-income students to obtain post-secondary education and training that their families would not otherwise have been able to afford. But the drawbacks can be numerous; one such drawback is the fact that student debt cannot currently be erased by bankruptcy.
As a result, student debt is suffocating a growing number of college graduates who, unable to find a job in a weak economy, have struggled mightily to make their payments. The problem has become so significant that the issue has been taken up by Congress and the Obama administration, with the latter pushing for policy changes that would ease the burden of student debt for large numbers of borrowers.
In the President’s remarks, delivered last Saturday, he emphasized the importance of assisting those most affected by student debt. He framed the issue in terms of access, contending that “higher education cannot be a luxury. It’s an economic imperative that every family must be able to afford.” President Obama pointed to a growing number of job-seekers who find that they need to acquire new skills to succeed, and to employers who have jobs available but no qualified candidates with which to fill them.
The President’s initiatives, which include expanding the federal work-study program, limiting interest rates on student loans, and extending the tuition tax credit, have met with Congressional resistance from Republicans who believe Obama is simply trying to distract young voters from a dismal economic outlook. A report from USA Today quotes Senate Minority Leader Mitch McConnell: “[Y]ou have to think that most of these students are sharp enough to put this president’s rhetoric up against his record and to conclude that it just doesn’t add up.”
It remains to be seen what policy decisions will emerge from the debate, but one would hope that they will, in any event, protect the rights of borrowers who, in many cases, were not given the whole truth by lenders or campus financial aid officers.