EDITORIAL: Congressional office report signals a New Deal on student loan debt
In two weeks, about 3,100 Central Michigan University students will leave Mount Pleasant with knowledge, lasting memories and mounting debt from federal or bank-issued student loans.
To date, federal college loan debt surpasses $1.26 trillion. The average 2016 graduate owes about $37,172 for four to six years after attending public university like CMU, according to U.S. Department of Education.
That figure is up six percent from last year.
With nearly 44.2 million Americans saddled with loan debt, progressive politicians and economists have argued in favor loan forgiveness or expanded income-based repayment plans adopted by the federal government.
At long last, the federal government might be coming to terms with the idea of forgiving student loan debt.
On Wednesday, Nov. 30, Congress met with its Government Accountability Office to discuss new findings on student debt. The office found that a mix of bad accounting from the feds and a large uptick of income-based repayment plans is creating an unpayable $137 billion hole.
While Congress squarely blames President Barack Obama and his administration for the two occurrences, their conclusions are clear: $108 billion of that balance must be forgiven in some way, and income-based repayments must be capped to ensure profitability.
It is the first time our Republican-led Congress has even looked at or considered options for student loan forgiveness in any capacity. While there is plenty of work to do on finding a plan that works, we support any plan that reasonably reduces our debt sentence.
The news comes at a time when new college graduates are experience peak anxiety due to pending student loans – including the 3,100 December 2016 grads from Central Michigan University.
Those concerns are well-founded. The Wall Street Journal, which broke the news last week, writes that there are still 8 million Americans in default due to student loans. That number is expected to rise as more students graduate.
The issue was a central theme in the 2016 presidential election. It’s why so many young people and college-age voters sided with U.S. Sen. Bernie Sanders and his populist economic message.
We’re glad that our lawmakers, especially stalwart those who consider themselves conservatives, finally agree.
Even Congress chooses to act with a new deal on debt, how they’ll implement the plan and what that means for borrowers remains cloudy.
One plan is to expand existing income-based repayment plans, capping off monthly payments at 10 percent of income. Ted Mitchell, undersecretary at the U.S. Department of Education, told the Wall Street Journal that these programs have been successful at guaranteeing repayments.
This plan lowers monthly payments by close to hundreds of dollars for borrowers and forgives loans over a period of 20 to 25 years, the Journal writes.
A second plan caps off payments at 12.5 percent of income, forgiving payments for 15 years. This one is of particular interest to President-elect Donald Trump, who also advocated paring the student loan program down considerably, affecting future students and their access to loans.
We’ll let legislators debate the specifics. While we wait, each of us can breathe a bit easier while looking forward to a life after college that doesn’t include bankruptcy and default.
