In President Donald Trump’s determination to dismantle all things Obama, his administration should spare the former president’s higher-education student loan reforms. They provide opportunities for more students to attend college and to repay loans at a rate that won’t put graduates on the road to ruin.
Keeping loan payments affordable allows borrowers to begin careers and families, buy homes and create savings accounts. These actions contribute to the nation’s overall economic health and pay off with bigger dividends down the road. Unrealistic payment demands are obstacles on a borrower’s path to success.
Students shouldn’t be let off the hook, but they should not be hobbled by loan schedules that drown them in the process. Unrealistic repayment plans will help neither the government nor the student. Congress should maintain the Obama administration’s achievement in expanding the income-driven repayment program for federal student loans.
The nation needs to support students and increase higher education investment in order to expand the ranks of a well-trained and employment-ready workforce. With the U.S. unemployment rate at a 17-year low of 4.1 percent, now’s the time for Congress to reprioritize college completion.
Republicans say current repayment plans are too generous and too expensive. Experts disagree, contending that federal student aid is mostly financially self-sustaining and that the income-driven repayment program is particularly inexpensive. The system generally requires students with undergraduate loans to pay 10 percent of their discretionary income monthly for 20 years and forgives any debt beyond that.
Rep. Virginia Foxx, R-N.C., is sponsoring the Prosper Act to overhaul federal student aid. The act would require new borrowers to pay 50 percent more per month and eliminate loan forgiveness after up to 25 years of repayment. The nonpartisan Congressional Budget Office warns that students would lose $15 billion in federal student aid over the next decade if the bill becomes law.
Educators say it also takes away protections from loan servicers, who would be governed by federal laws and exempt from tougher state regulations. In August, the Department of Education announced plans to stop collaborating with the Consumer Financial Protection Bureau in overseeing companies that service student loans.
Many higher education supporters are alarmed by the Prosper Act. In a letter to House members, 35 mostly liberal groups warned that the act “exacerbates the increasing burden of student debt and continued inequity in higher education access and outcomes.”
Peter McPherson, head of the Association of Public and Land-grant Universities, says the bill would also make students and taxpayers “more vulnerable to predatory actors and poor performing institutions and programs.”
The nation has spent decades creating Pell Grants and building the federal student loan program to increase college access for low-income students. There is no need to overhaul a system that appears to work and is helping college graduates goose the economy.
— St. Louis Post-Dispatch