Student Debt Crisis (Somewhat) Averted
In mid-May, college graduates across the country realized America was again approaching an important debt ceiling. On July 1, interest rates on government-subsidized Stafford loans were set to double, from 3.4 to 6.8 percent. Working through weeks of disagreement, and in contrast to much of its track record of late, Congress came together in late June and passed a bill that will keep interest rates at their reduced level of 3.4 percent for another year.
The legislation is estimated to save students nationwide an average of $1,000 each—but it raises questions about the viability of debt-financed education. As this space wrote in May:
There is little doubt that a college degree is—and remains—a valuable investment. The Atlantic recently reported that the typical college graduate earns, on average, $570,000 more in the course of a lifetime than a person with only a high school degree. Financial benefits aside, college provides once-in-a-lifetime opportunities to explore and grow in a safe environment and to meet people from all experiences and walks of life—a journey whose value cannot be underestimated.
As the total student debt has now exceeded $1 trillion, a conversation about how to finance education in a sustainable manner is long overdue. Education is a core value in homes across America—and American higher education is, in many ways, the world standard, attracting students from across the globe. The emerging crisis in student debt has opened the door for some innovations: For example, the town of Niagara Falls in upstate New York has offered to buy back new residents’ student debt.
Still, the lengths being gone to in Niagara Falls are a reminder of what we are taught in Deuteronomy: “if…there is a needy person among you…do not harden your heart and shut your hand against your kind. Rather you must open your hand and lend whatever is sufficient” (Deuteronomy 15:7-11). We must do more to help our students then just saddle them with debt; rather, we should be working to find new ways for them to make their education possible that do not imperil their futures—financial or otherwise.
Image courtesy Los Angeles Times