College Loan Plan Hangs in Limbo

College Loan Plan Hangs in Limbo

Madison Dalton

Madison Dalton, News Editor

As college application season approaches, the cost of college becomes an issue for many seniors. With the cost of public college increasing at 8.6% last year, according to CNN, it is crucial for students to know what student loan options are available to them.
Recently, the Obama administration proposed a new student loan plan in an attempt to make college more affordable for students. The plan is both complex and controversial, but the basics are as follows:
• All student borrowers would be eligible to enroll in the Pay as You Earn program, which caps payment for student loans at 10% of the borrower’s income. This means that students will not be forced to spend more than a tenth of their paycheck paying back loans. This program also forgives loans after 20 years. In other words, students will not have to pay off loans for more than 20 years of their life.
• The Department of Education would work towards ensuring that students are more aware of the borrowing programs available to them. Specifically, the department would contact individuals having trouble with borrowing and undergraduates who have accumulated high amounts of debt.
Bubbles
Critics of the plan point to the possibility of it creating a tuition bubble. In other words, the cheaper college is, the more students enroll, the more expensive college gets, the government must find ways to make college cheaper once more, thereby setting off a cycle of college tuition inflation. On the other hand, dwelling over hypothetical repercussions of this plan may seem tasteless to students currently drowning in college debt.
According to Robby Soave from The Daily Caller, the Obamas themselves had a combined debt of $120,000 after college. This debt was not fully paid off until Obama signed a $1.9 million deal for his book, The Audacity of Hope, in 2004. Soave also notes that, “Cumulative outstanding student loan debt now totals $1 trillion” — something that many higher education analysts consider unsustainable.
Government Burden
Another popular argument against the plan is the belief that loan forgiveness will create too much of a burden on the federal government. While this point does bear merit, especially when considering our current national debt, it is important to note that the government makes a huge profit off student loans. In fact, according to the Congressional Budget Office, the federal government expects to make a record $50 billion profit on student loans this year. In the words of David Jesse from the Detroit Free Press, handing out student loans is a “low-risk business for the federal government.”
Regardless of one’s position on the Obama Administration’s student loan plan, the mere proposal of the plan is undeniably a landmark event in the realm of American higher education.