July 22, 2014
College loan debt is at an all-time high. To address this problem, President Obama recently used executive action to extend income-based loan repayment options to millions more students. The program caps monthly payments and completely forgives student loans after as little as 10 years.
Sounds great, right? Not so fast. Loans have to be repaid by someone. And that someone is you.
Capping loan repayments, forgiving balances — none of these options are free. Taxpayers, many of whom don’t hold bachelor’s degrees themselves, must pick up the tab for this federal largesse. Moreover, generous income-based repayment options and loan forgiveness — and federal student loans and grants generally — do nothing to mitigate ever-increasing college costs.
Increases in student aid are the wrong way to lower college costs, Burke adds:
In fact, college costs over the past few decades have risen in tandem with increases in aid, suggesting such aid might actually exacerbate the problem. Why should a university work to keep tuition and fees in check when there is a virtually open spigot of federal aid, readily available to students, with little concern about the student’s credit-worthiness or ability to pay back the loan later?
A better option for driving down college costs and making education more affordable is the new HERO Act, which would reform the broken accreditation process and enable new educational options.
“South Carolina, for instance, could allow Boeing to credential aeronautical engineering courses,” Burke says, “and Texas could enable Texas Instruments to credential mathematics courses.” This would give students access to training they need while reducing the size of the loans they need to take out.
Do you think taxpayers should pay even more of students’ higher-education costs?