NewburyportNews.com, Newburyport, MA

May 18, 2013

Student loan debt crisis affecting generations

John Tierney
Newburyport Daily News

---- — Overwhelming. Crushing. Nightmarish. These are just some of the words local residents use when they describe their student loan debt burden to me. Many share how they have been dutifully making their payments, but their debt has caused them to indefinitely postpone certain “life decisions” such as buying a car, owning a home or starting a family.

I know parents who are anxious and concerned about the debt their sons and daughters have accumulated. Some of these parents have delayed retirement or made early withdrawals from their 401(k) to help with their child’s student loan debt.

Student loan debt is a crisis that is impacting generations of Americans, and it demands the full and immediate attention of Congress. Those about to enter college, and some now attending, are too often forced to consider not enrolling, delaying enrollment or dropping out because of the shock factor of looming loan obligations.

In the near term, Congress must again take action to ensure that the rate on a particular Stafford loan does not double on July 1. If Congress does not act, more than 7 million students will incur an estimated $4.3 billion in repayment costs for the 2013-2014 academic school year.

However, we must not stop there. To help as many of the 37 million student loan borrowers — those in school, those graduates and those forced to drop out while still having debt — as possible, longer term solutions are desperately needed.

There is something glaringly unjust when Wall Street banks whose reckless behavior nearly brought this country’s financial system to ruin can access “easy” or “cheap” money while students and families have to pay steep interest rates in order to pursue the American Dream. Our political rhetoric speaks to the need for college graduates — for personal opportunity and economic growth — so our policy actions must follow suit.

Of the $1 trillion in student loan debt, over $800 billion is backed by the federal government. The interest rate for the majority of federally backed student debt exceeds 6 percent. Meanwhile, big banks can borrow at the FED discount window at much lower rates and homeowners can currently refinance their mortgage at a little more than 3 percent. Don’t students and their families who are trying to finance a college education deserve similar treatment? I think so.

That’s why I introduced legislation, along with Sen. Jack Reed of Rhode Island, to overhaul the federal student loans program so borrowers have access to the lowest rate possible. Some want the federal loan programs to continue to make a profit from students and families. I would disagree and argue that, once an appropriate interest rate is set, good policy dictates that the nation, our economy and families will profit from students affordably completing school and becoming contributing members of society.

Additionally, as part of our bill, student borrowers will be able to responsibly refinance their existing debt. This component of our legislation is critical for millions of students across the country. It is also anticipated to increase the likelihood of repayment and have significant economic benefits. In fact, the Center for American Progress has examined refinancing and put forward an estimate that indicates refinancing for only those federal student loans with an interest rate above 5 percent could lead to savings of $14 billion for individual borrowers in 2013 and inject as much as $21 billion into the economy in the first year alone.

A local resident recently wrote to me and said, “in America, education is everything.” She’s right. A college education continues to be the pathway to increased opportunity for success, but Congress has to do more to ensure those students who pursue higher education can afford it. In the weeks and months ahead, I’ll continue to press for common sense – and hopefully bipartisan – solutions that help our students and their families.

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U.S. Rep. John Tierney represents the 6th Congressional District and is the only Massachusetts member of the Education and Workforce Committee. He invites you to share your student loan stories on his Facebook page at www.facebook.com/CongressmanJohnTierney.