Last year, the Federal Reserve Bank reported that student debt had grown to $100 billion for the first time in American history. Recently, that number was reported to have risen to a record high at close to $1 trillion, although most reports show the number to be a mere $750 billion. Student debt is also for the first time higher than credit card debt, according to Reuters.
Currently, federal assistance accounts for 85 percent of current student aid, according to a CBS news article on Nov. 6, and Ron Paul wants to liquidate the Department of Education and five others in the process. In fact, Paul’s plan is to eventually phase out federal aid for students altogether. The main source of funding for public higher institutions comes from the government, so how is eliminating that source supposed to promote higher education? Obama’s plan will help students better manage their debt after they graduate by offering federal debt management plans with low interest rates so graduates will not have an immediate, heavy financial burden in the unforgivable job market.
Lucky for us, Obama is actually doing something about the enormous student debt problem now instead of getting bogged down in Congressional red tape. The White House will use its executive authority to accelerate changes in student loan procedures next year. The original plan was to implement these changes in 2014, as approved by Congress, but Obama rightfully feels that the longer this volcano stays latent, the bigger the explosion will be when it happens.
Obama has an agenda that will affect 1.6 million people next year, including current students with loans. While the plan may be aggressive, the Obama administration is pushing the envelope until students can actually afford to attend a higher education institution without looking over their shoulder for a credit collector. Under his plan, graduates drowning in high monthly payments and ridiculous interest rates will be rescued for the time being. In general, Obama’s platform is more forgiving than Paul’s.
I agree that it may have been optimistic of the Department of Education to say in a press release on Oct. 25 that “these changes carry no additional cost to taxpayers.” But despite what Republicans may say, there will be little change, since ultimately all federal loans are backed by taxpayers anyway.
Bottom line, Obama’s plan is the best of a bad situation faced with a GOP-controlled “do nothing” Congress.
