As graduation season swings into high gear, a new economic crisis confronts thousands of this year’s high school and college grads — crushing college student loan debt.
Last week, we learned that student loan debt in America has climbed to $1 trillion, which is more than credit card and other consumer debt. According to the New York Times, “Ninety-four percent of students who earn a bachelor’s degree borrow to pay for higher education — up from 45 percent in 1993.”
The average student comes out of college saddled with more than $20,000 in debt. This is a tremendous burden for young graduates, many of whom are having trouble landing that first job. Faced with the prospect of even more debt, many put off going to graduate school. And, for those lucky enough to find work, high monthly student loan bills may mean working two jobs or moving back in with mom and dad. While everyone agrees that a college education is the pathway to greater success in America, student loan debt is leaving too many graduates stalled at the starting gate.
Recognizing the relationship between education and economic growth, President Barack Obama has made raising America’s lagging college graduation rates one of his top priorities. “Higher education can’t be a luxury, it is an economic imperative that every family should be able to afford,” Obama recently said.
It is no secret that rising tuition costs are a major cause of stagnant or declining graduation rates, especially in communities of color. Currently, the President is urging Congress to renew a 2007 bill, passed at the height of the financial crisis, which lowered the federal student loan interest rate from 6.8 percent to 3.4 percent.
If Congress fails to act, the current rate will double by July 1, increasing the average student debt burden by $1,000 over the life of the loan.
The irony of this debate is that both sides in Congress support an extension of the 3.4 percent rate. But like earlier fights over raising the debt ceiling and extending the payroll tax cut, Congress is arguing over how to pay for it. Senate Democrats would cover the $6 billion cost of the bill by closing some tax loopholes on high earners. Republicans continue to balk at any perceived tax hikes for the rich and have made a counter-proposal to cut funding for a preventive health initiative that is part of President Obama’s 2010 Health Care plan.
Last week, on the same day that student loan debt reached the $1 trillion mark, Senate Republicans blocked a vote to extend the 3.4 percent interest rate on student loans for another year. I am reminded of an old African proverb: “When elephants fight, the grass suffers.” Thousands of low-income students and their families are suffering while the two sides in Congress engage in ideological warfare.
College graduation is as important to our national security as a strong military. But when it comes to funding, education seems to always take a back seat to war. One wonders how much graduation rates for African Americans and Hispanics would rise if they did not have to overcome the added economic barrier of high student loan debt.
Marc Morial is President and CEO of the National Urban League.
