THE ISSUE: Calling it the “Pay As You Earn” executive order, President Obama has made it easier to repay student loans.
Calling it the “Pay As You Earn” executive order, President Obama has made it easier to repay student loans.
Consider that the $99,716 median household income for families headed by a four-year college graduate in 2010 was more than twice the income for those headed by a high school graduate, according to Trends in College Pricing.While those are nationwide averages, the trend also applies to a state such as Alabama, where too many people struggle to survive on low-wage jobs.
While it’s popular for political leaders in our state to be proud of low taxes, the continued reductions in state funding for higher education and the subsequent tuition and fee hikes are nothing more than a tax on college students and their parents. Shifting the cost of higher education from direct government funding to student loans makes about as much sense as treating an uninsured patient’s sinus infection in the emergency room.
Many students are dealing with this situation by borrowing more money, and a growing number are not able to repay it under the current rules. Almost 9 percent of students could not pay back their loans in 2009, up from 7 percent the previous year. The default rate in Alabama is even higher, at 9.2 percent.
To make it easier for college graduates to repay their student debt, President Obama recently issued an executive order accelerating the implementation of new rules that Congress had intended to begin in 2014. Given the economic state and the reluctance to adequately fund higher education, that is a good move.
The present law caps monthly payments at 15 percent and forgives outstanding loans after 25 years. The president’s order caps it at 10 percent and offers forgiveness after 20 years. It also allows students to consolidate federally backed loans to reduce interest rates.
Obama said the plan will save money by eliminating banks as the middle man for student loans.
It’s a small step, but every penny counts for the thousands of families who live just one pay check from ruin.
Students who borrow money have a responsibility to spend it wisely and repay it on time. Unfortunately, some students waste student loans on housing, cars and entertainment when they could work part time or live at home to cover those expenses and limit the borrowed money for tuition, books and fees.
But as long as political leaders are not willing to provide adequate funding through taxation, the student loan program will remain the emergency room for higher education.
Calling it the “Pay As You Earn” executive order, President Obama has made it easier to repay student loans.
Consider that the $99,716 median household income for families headed by a four-year college graduate in 2010 was more than twice the income for those headed by a high school graduate, according to Trends in College Pricing.While those are nationwide averages, the trend also applies to a state such as Alabama, where too many people struggle to survive on low-wage jobs.
While it’s popular for political leaders in our state to be proud of low taxes, the continued reductions in state funding for higher education and the subsequent tuition and fee hikes are nothing more than a tax on college students and their parents. Shifting the cost of higher education from direct government funding to student loans makes about as much sense as treating an uninsured patient’s sinus infection in the emergency room.
Many students are dealing with this situation by borrowing more money, and a growing number are not able to repay it under the current rules. Almost 9 percent of students could not pay back their loans in 2009, up from 7 percent the previous year. The default rate in Alabama is even higher, at 9.2 percent.
To make it easier for college graduates to repay their student debt, President Obama recently issued an executive order accelerating the implementation of new rules that Congress had intended to begin in 2014. Given the economic state and the reluctance to adequately fund higher education, that is a good move.
The present law caps monthly payments at 15 percent and forgives outstanding loans after 25 years. The president’s order caps it at 10 percent and offers forgiveness after 20 years. It also allows students to consolidate federally backed loans to reduce interest rates.
Obama said the plan will save money by eliminating banks as the middle man for student loans.
It’s a small step, but every penny counts for the thousands of families who live just one pay check from ruin.
Students who borrow money have a responsibility to spend it wisely and repay it on time. Unfortunately, some students waste student loans on housing, cars and entertainment when they could work part time or live at home to cover those expenses and limit the borrowed money for tuition, books and fees.
But as long as political leaders are not willing to provide adequate funding through taxation, the student loan program will remain the emergency room for higher education.
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