Federal Bailout for Students: Erase loan debt?
Photo courtesy of bestloanconsolidationdebt.com
A new angle on our country's desperate digging for economic stimulus: wipe out student debt. That's the proposal of Wy Spano, director of the Masters of Advocacy and Political Leadership Program at the University of Minnesota Duluth. His opinion piece ran today in the Star Tribune.
That would come at a hefty price tag of $70 billion. By comparison, it's a drop in the hat next to the more than $800 billion stimulus package just passed by the U.S. House.
Why would this work? Read his explanation below.
Spano details the change in our country's focus on helping students pay for their education:
Conservative orthodoxy told us to treat higher education as a huge benefit to the recipient, which the recipient -- not the community -- ought to pay for. We began to resent and cut back on the public support given higher-education institutions. The result: Tuition and fees at U.S. colleges increased 439 percent from 1982 to 2007, while median family income rose 147 percent. The cost of one year at a public college or university equals more than a quarter of median family income. Even at a two-year institution, the cost of a year's study is nearly half a poor family's income. We've priced education out of the average family's reach. Not surprisingly, the United States is now one of the few countries in the world where the education level of those 25 to 34 is lower than that of older adults.
Think about that. If higher education is the key to economic success, we're systematically denying opportunity to our younger generation. In less academic terms: We're screwing our young people big time.
So how would making all people free of federal student loans actually help the economy. His argument:
The Obama administration is working on aid to higher education as part of its economic stimulus package. Unfortunately, it has not proposed the one action that would capture the nation's attention and signal that we've decided, as an American community, to make higher education affordable for everyone: Pay off all federal student loans. The amount is just a bit under $70 billion. That single act would make it possible for the hundreds of thousands of student-debtors to become active consumers, something we're trying to encourage in difficult economic times. Each month, student-loan debtors together would have hundreds of millions of dollars available that once went to loan repayments. That money could go to helping them survive a job loss, or buy a car, or pay off other debt.
While we wouldn't complain about being free of our students loans, would this really work? Discuss.
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