Obtaining a college degree is supposed to be a major step toward realizing the American Dream. Unfortunately, because of enormous student debt graduates are finding the dream farther out of reach.
Student loan debt has reached $1.2 trillion. That’s more than credit card debt and auto loan debt. It works out to an average of $28,000 per borrower with an average of 13.4 years to pay off a student loan debt.
Parents are also feeling the pinch. Over 3 million parents owe almost $62 billion on federal loans, known as PLUS loans, they take out to send their kids to college.
That is a stark contrast to when I went to college. I remember writing checks to cover “fees” of $89.00 a semester as an undergraduate.
I knew the state of California was making an investment in me and many other students ready to take their first step toward achieving their life goals.
As tuitions continue to rise, it’s clear we are no longer making that kind of investment in our people. Between 2008 and 2012, 44 of 50 states decreased their funding support for public colleges.
We are pricing our kids out of the possibility of going to college. That is a lot of untapped potential. That means future generations are not going to be prepared to compete in the global economy.
Graduates are putting off buying a home or purchasing a car because they are facing an incredible amount of debt. It is stifling our entrepreneurial spirit as young people aren’t able to take a chance on a start up.
If this problem persists it will have a serious impact across a number of sectors—such as innovation, science, education, the economy, and national security. It won’t just be bad for our kids. It will be bad for America.
There are two things we need to do to reverse this trend.
First, we need to provide some relief to graduates burdened by a mountain of debt.
I have introduced legislation with this in mind. The Fee Free Student Loan Act eliminates administration fees on federal student loans, which are nothing more than a hidden tax. This would save students over $1.5 billion per year.
I plan to re-introduce the Student Loan Fair Payment Act to require that extra payments made on a student loan must go toward paying down the principal of the loan. Currently, borrowers able to pay a little extra toward their loan are seeing that money applied to interest.
When President Obama announced his Student Bill of Rights in March, the Student Loan Fair Payment Act was a part of his executive order. That was good news. Now let’s codify that action into law.
I am also an original cosponsor of legislation to allow the refinancing of student loans.
Under the bill, borrowers of undergraduate student loans could refinance to an interest rate of 3.86 percent. Currently, some student loan borrowers are stuck with interest rates as high as 8 percent on their existing loans.
If enacted, over 2.3 million borrowers in California would benefit from being able to refinance their student loans at lower interest rates.
Congress should pass these bills and send them to the President for his signature.
The second thing we must do is start investing in our next generation of leaders. We need a rewrite of the Higher Education Act, which Congress is now considering, with a top priority on college affordability. As a senior member of the House Committee on Education and the Workforce, it will be a topic I plan to drive home as the reauthorization of the HEA is underway.
Those of us in Congress working to make college more affordable cannot do this alone. A few years ago interest rates on federal student loans were set to automatically double unless Congress acted to keep them down.
A social media campaign ensued with students across America telling their stories with the hashtag#DontRaiseMyRates. A campaign that in the end was successful.
We need those stories again. Students, graduates, and parents should let their member of Congress know how rising student loan debt is impacting their lives.
Let’s make sure the concept of the American Dream is not a thing of the past but a potential future for every American.
This editorial first appeared in Times of San Diego