Student loan debt now exceeds $1 trillion. That’s more than credit card debt. That’s more than auto loans. In fact, student loan debt is only second to mortgage debt in this country.
That’s unconscionable. Students and their families should not have to sign away their financial futures in order to get a good education. Yet today’s graduates aren’t just leaving campus with newly minted degrees; they’re leaving with a lifetime of debt.
Students at KSU and OSU, Sinclair and Cincinnati State, Ohio University and the University of Toledo, and countless other schools throughout our state are looking forward to starting their futures upon graduation. These students will graduate into an economic recovery and better job prospects than other recent graduates, but their heavier debt burden means that graduates will spend their adulthood paying off their debts instead of buying a home, starting a business, or continuing on to graduate school. Money that could be spent for productive economic activity will instead go to servicing debt.
According to the Wall Street Journal, the average student-loan debt for a borrower earning a bachelor’s degree this year is $30,000. That’s why subsidized Federal Direct Stafford Loans are so important. Most independent Stafford borrowers – about 80 percent – come from families making less than $40,000 a year.
Unfortunately, unless Congress acts soon, more than 361,000 college students in Ohio will face an average of $1,000 more in costs over the life of their loan, per subsidized Stafford loan.
Beginning on July 1, 2013, interest rates on these need-based loans will double from 3.4 percent to 6.8 percent for borrowers, unless we do something to stop it. Allowing Stafford Loan interest rates to increase will hinder Ohio students’ ability to afford college – and hurt America’s economic competitiveness.
That’s why I’m fighting to pass the Student Loan Affordability Act, which would keep college affordable for more middle-class and low-income students. The bill would accomplish this by maintaining the current interest rate for subsidized Federal Direct Stafford Loans at 3.4 percent. This legislation would help ensure that more Ohioans can achieve their dream of going to college – at no extra cost to taxpayers.
In fact, this bill would close several wasteful loopholes. Among other things, this fully paid for bill would close a loophole for businesses that shutters their doors in the U.S. only to open in China or India or Brazil and get a tax break for moving expenses.
And it would ensure all forms of crude oil are included in the Oil Spill Liability Trust Fund, eliminating a special tax loophole the saves the oil industry money but not making them pay to clean up tar sands or oil sands.
More must be done to keep down the cost of higher education – and the federal government must continue to provide students with federal student loan options with borrower-friendly terms.
Students should not be required to mortgage their future or delay their opportunities for a better life because of student loan debt. We can solve this problem, and save money by passing the Student Loan Affordability Act.
Sherrod Brown is a United States Senator from Ohio.