News Column

Washington takes a swing at easing student loan debt

June 10, 2014

By Ken Newton, St. Joseph News-Press, Mo.

June 10--Missouri Western State University and Northwest Missouri State University sent new graduates into the world last month, each with a diploma to show for their college experience and, for seven out of 10 of them, some amount of student debt.

The rising levels of debt from student higher education loans -- $1.19 trillion nationwide, eclipsing the amount of credit card debt -- have led the White House and members of Congress to seek solutions to a problem hurting individuals and the overall economy.

President Obama on Monday outlined a series of executive actions to help ease the loan burden carried by some graduates. And the U.S. Senate will take up legislation this week that would allow those in debt to refinance their student loans to lower interest rates.

The president went on the social networking website Tumblr on Tuesday afternoon to explain to young people his expansion of income-based repayments.

After becoming law in 2010, capping repayments at 10 percent of monthly income, the Pay As You Earn system only accommodated those taking on future debt. Mr. Obama's order Monday aimed at developing new rules to help those with older loans.

"That gives people flexibility," the president said to the Tumblr community. "It doesn't eliminate your debt, but what it does is make it manageable each month so that the career that you choose may not be constrained."

Marilyn Baker, who directs the financial aid office at Missouri Western, said workers at the St. Joseph university administered $36 million in federal aid during the last academic year, with more than $21 million being student loans.

"We realize that upon graduation or departure from the university that sometimes students don't have a job," she said Tuesday.

The financial aid director said her office contacts students who are delinquent on their student loans to assist in finding options for repayment.

"A lot of times students might think that we're hassling them, like a collector. What we're trying to do is help them," Ms. Baker said.

"There is no reason a student should be delinquent on their student loans with a couple of the income-based repayment plans that are out there."

The White House released statistics Tuesday indicating Missouri has 909,000 federal student loan borrowers with an outstanding debt of more than $23.2 billion.

Kansas, said the release, has 453,000 borrowers and $10.8 billion in outstanding debt.

At least 110,264 additional Missouri borrowers and 47,144 Kansans would benefit from the expanded Pay As You Earn program put forth by the president, the White House said.

According to data collected by the U.S. Department of Education, Missouri Western graduates had an average debt of $22,287 in 2012. At Northwest Missouri State, the number was $23,400.

The average debt for public and private four-year institutions in Missouri was $23,030.

Sen. Elizabeth Warren, a Massachusetts Democrat, joined the president Monday as he signed the executive actions on student debt. She sponsors the Bank on Students Emergency Loan Refinancing Act, which the Senate will vote on, perhaps today.

Missouri Sen. Claire McCaskill, also a Democrat, announced Monday that she would support passage of the legislation.

"For thousands of Missouri's young people, staggering student loan debt is strangling the economic opportunities that are supposed to come with a college degree," the Missouri lawmaker said. "Every dollar paid in interest on that debt is a dollar not invested in a small business or a new home."

Not every senator looks favorably on the measure. Tennessee Sen. Lamar Alexander, a Republican who once served as U.S. secretary of education, issued a statement regarding it a "partisan, political stunt" that would add to the federal deficit and do little solve the overall problem.

"College graduates don't need a $1 a day subsidy to help pay a $27,000 loan," he said on the Senate floor Monday. "They need a good job."

Ken Newton can be reached at Follow him on Twitter: @SJNPNewton.


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Source: St. Joseph News-Press (MO)

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