Student loan debt seen as 'major' issue for young people as elections approach
As the November midterm elections approach, student loan debt might be given a bigger spot on the national political stage.
A December poll of Americans ages 18 to 24 conducted by the Harvard University Institute of Politics found 57 percent of those polled said student loan debt is a "major" issue.
Mount Pleasant senior Jacob Arnold, who has taken out several loans, said student loans should be at the forefront of the political landscape and that structural reform is needed.
"I think (the federal government) should increase the amount of money students can take out," he said. "A lot of times, students will be deep into their major and they'll realize they don't want to go into that field."
No significant reform to the system has been seriously considered by lawmakers over the past several months. Lawmakers reached a last-minute deal last summer to avoid federal student loan interest rates from doubling to 6.8 percent by tying them to the U.S. Treasury's 10-year borrowing rate.
However, by 2017 interest rates are projected to hit 7 percent, according to the Congressional Budget Office.
Add a series of significant cuts to higher education funding at the state level across the country, and the United States is left with $1.2 trillion in outstanding student loan debt – a figure that has risen steadily over the past decade and critics say will cripple the economy in the long-term.
Any action on student loans in 2014 appears unlikely, as congressional lawmakers are set to spend much of the year campaigning for re-election when they are not in Washington battling it out on immigration reform or Obamacare.
Leaving the system as is might be in the government's best financial interest. According to a January CBO report, the federal government is projected to make $185 billion on new student loans over the next 10 years.
‘‘This is obscene," said Sen. Elizabeth Warren, a Massachusetts Democrat who ran on a student loan reform platform, in a statement following the report's release. "This report reinforces what we already knew — instead of investing in our children and their futures, the government is squeezing profits out of our young people and adding to the mountain of debt they will spend their lives struggling to repay.’’
However, a January Government Accountability Office report cautions that interest rates cannot be set at a certain point for the government not to make a profit.
"Borrower interest rates that are needed to cover Direct Loan costs at one time may not cover costs at another time," the report read.