News Column

EDITORIAL: Student loan debt hurts economy

June 14, 2014

The Sentinel, Carlisle, Pa.



June 14--College student loan debt is more than a drag.

A study last December by the Institute for College Access and Success ranked Pennsylvania third among the 10 worst states with 2012 college graduates carrying the highest student loan debt averages -- $31,675. That was for graduates from not-for-profit public and private institutions of higher learning.

Those averages, and variations on a theme depending on which type of school the graduate attended and his or her current career compensation, often prove a heavy individual burden, which translates into a drag on the national economy.

Nationally, there is the matter of amassed student debt -- now estimated near $1.2 trillion, and federal statistics indicate more than 9 percent of 40 million borrowers of student loans have, or will have, defaulted.

President Barack Obama's executive order signed last week sought to rectify that by providing some relief to borrowers. Meanwhile, Senate Republicans blocked a Democrat-sponsored bill to let people refinance their student loan debt at lower rates -- a move the White House claimed would help about 25 million individuals with such debt realize individual savings of around $2,000.

Political posturing on both sides does nothing to ease a very real economic problem lingering in the wake of the 2008 financial crisis.

Graduates by the thousands, faced with a slowly recovering job market and often low wages, must spend longer crawling out of a financial hole before even considering starting a family, setting down roots through real estate purchases and more fully contributing to the local and national economy.

Obama's executive order would allow an estimated 5 million students meeting certain income requirements to cap loan repayments to 10 percent of current income -- an extension of the in-place Pay as You Earn program providing for affordable payments.

National student debt will continue to grow exponentially in indirect proportion to an economy recovering at a snail's pace. Means to correct that imbalance lie in the hands of Congress and state legislatures.

Sadly, little movement is underway -- it's the coming generation of college grads and their children who will be tendered the bill.

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(c)2014 The Sentinel (Carlisle, Pa.)

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Source: Sentinel, The (Carlisle, PA)