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Akron
Beacon Journal...
Degrees
of borrowing
October 31, 2011
The
prospect of carrying for decades a
load of student debt hardly encourages advanced learning. On Wednesday,
President Obama took a well-advised step in issuing the “Pay As You
Earn” executive
order. There are many reasons postsecondary enrollment has increased 22
percent
nationwide the past five years. In its recent “Trends in College
Pricing”
report, the College Board illustrated one of them, noting: “In 2010,
the
$99,716 median family income for families headed by a four-year college
graduate was more than twice the median income for families headed by a
high
school graduate.”
In
short, the demand for higher
education is growing along with the value, while college costs are
rising faster
than inflation. At the same time, family finances have been battered by
a poor
economy. To pay for their education, students are accumulating
substantial loan
debt long before they earn an income. Data reported by the Federal
Reserve Bank
of New York this month showed more than $100 billion was taken out in
student
loans in 2010, with total outstanding student debt expected to exceed
$1
trillion this year. Student loan debt has surpassed credit card debt.
Congress
approved legislation last
year to ease the loan repayment burden. The president’s plan, in
effect,
expedites that initiative, pushing to have the relief fully in effect
in 2012
rather than in 2014. The current law caps monthly payments at 15
percent of
income and forgives outstanding loans after 25 years. Obama’s order
lowers the
cap to 10 percent and loan forgiveness after 20 years. Further,
students will
be able to consolidate federal-backed loans to reduce their interest
rates.
The
president’s plan isn’t novel, and
it doesn’t address escalating college costs, the root cause of
indebtedness.
More, it applies only to those loans backed by the federal government
and taken
out after 2008. What it does is promise modest relief, when every last
buck
counts, to about 1.6 million borrowers, among them roughly 76,000 in
Ohio.
Read
this and other articles at Akron
Beacon Journal
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