Instead of working with Democrats on a responsible plan that would help students and block the doubling of the interest rates, both House and Senate Republicans have insisted on legislation that would increase student loan debt, reducing the deficit on the backs of college students. As recently as Wednesday, 228 House Republicans voted once again to block bringing up Democrats' H.R.1595, Student Loan Relief Act of 2013, which would have prevented the rates from doubling on July 1 by freezing the rate at 3.4 percent for two years.
College students and families across the country are anxiously looking for Congress to act and bring Washington's latest hostage crisis to an end.
Because Congress did not act, on Monday, July 1, 38 million Americans will be paying more for their student loans as interest rates double to 6.8 percent.
We knew this day would come for months and the cost of inaction is well known, yet the House of Representatives spent the final hours of the work week jamming through a bill to increase offshore oil and gas exploration -- with hardly a word uttered towards the plight of students.
Wells Fargo recently conducted a survey of recent college graduates and found that over half consider debt to be their biggest financial concern. The rising costs of higher education coupled with the stress of paying student loans are putting increasing pressure on students. Instead of feeling excited to begin the next journey of their lives, recent graduates are entering the working world stressed out and drowning in debt.
College costs have skyrocketed over the past three decades -- an undisputed fact that is reflected in the everyday realities of six million Americans at serious risk of defaulting on their loans: young people and recent graduates struggling to grab a foothold in the workforce, and an increasing number of parents and grandparents, who take on large debts to pay for their children and grandchildren's education instead of retiring. Many seniors are seeing their Social Security checks garnished because they fell behind on student-loan payments.
The time for reform is now.
As outstanding educational debt soars past $1 trillion, it's clear that the outmoded tradeoff of debt for diplomas is no long working for Americans.
Ultimately, the victim of such failures is our country's youth. Students graduating with high debt encounter difficulties in qualifying for home and automobile loans. Unfortunately, nearly half of students at public colleges have costs that aren't covered by financial aid or family contributions, causing them to work longer hours or borrow more.
Students shouldn't have to mortgage their futures and sign up for decades of debt repayment in order to gain access to the middle class -- especially in today's challenging job market.
While a long term solution to the student loan crisis remains out of reach, Congress can take several steps now to alleviate the strain on current and future borrowers.
First, we should extend the current interest rate of 3.4 percent until Congress comes to an agreement -- borrowers should not be stuck in limbo due to Congress' partisan gridlock.
Second, we should ensure a reliable, fixed rate over the lifetime of all student loans, not subject students and families to the ups and downs of variable rates year over year, which can make borrowing more expensive in the long run.
Finally, we must ensure that the Pell Grant program is fully funded. Pell Grants are essential for low-income Americans to access and complete college, and make their way into the middle-class. Any cut to Pell Grants means low-income must take out additional loans or work longer hours -- risk factors that increase their odds of dropping out of school.
College dropouts with significant debt struggle with repayment over the course of their lives and do not receive the benefits afforded to their peers who have debt, but obtain higher-paying jobs as a result of college completion.
This is a no-win situation for anyone.
A college education is one of the most important investments we can make in the next generation. Despite our ideological differences, Congress has an interest in improving the future for our country's students. We cannot let loan rates to rise to the point where they become burdensome for graduates or make college a luxury very few can afford -- risking the loss of future doctors, engineers, or scholars.
The solution must be a comprehensive plan that addresses high tuition costs, better loan servicing, and additional financial education.
It is imperative the U.S. remains competitive in the global economy. Congress must end this political back-and-forth and instead concentrate on passing a bipartisan compromise to ensure students can repay their loans and realize their full potential.