National debt is a bigger problem than student debt
Predictions of looming disaster for millions of college students have some of them convinced the sky is falling over federal student loan rates. It is not.
But a genuine disaster involving the national debt is not far off. Already it is affecting all Americans, including those students whose economics classes ought to have taught them the debt drags down the standard of living of everyone in the country.
At nearly $17 trillion, the debt is a growing millstone around the necks of all of us. It represents more than $55,000 for every man, woman and child in America – and it will have to be repaid. The longer it is allowed to grow, the worse the problem becomes.
Certainly, students may view their higher education loan debts as more immediate concerns. But the effect of the interest rate increase that will occur without congressional action is far from catastrophic.
Student loan interest is pegged at 3.4 percent. Unless Congress intervenes, it will increase to 6.8 percent. The impact would be about $2,600 for an average student – not that serious, given the generous 10-year repayment schedules on most such loans.
Plus, how many other people have borrowed money and seen interest rates increase on them? The government can’t shield everyone.
For weeks, however, President Barack Obama and liberals in Congress have been whipping up hysteria among students. They insist there is no reason for conservatives to block a simple law holding the rate at 3.4 percent. There is a good reason, though. Continuing to subsidize student loans would add to the national debt.
A bill to hold the rate down failed in the Senate last week and sparked yet another round of recriminations. It would have postponed the increase for a year.
“Today our students once again wait in vain for relief,” said Sen. Tom Udall, D-N.M.
But how many times has Congress “kicked the can down the road” with temporary measures that amount to nothing more than postponing the day of reckoning on deficit spending? That has become standard procedure in Washington.
Several possible compromises are on the table. For instance, one bipartisan group of lawmakers proposed a bill that would hold student loan rates down but would link them to financial markets. In other words, when the economy picks up, student loan interest rates would go up. That might work, although as we know, it’s very possible for Wall Street to do well while most of America suffers economically. Still, no solution will be perfect.
But all of this is beating around the bush of another serious problem: Universities are too expensive, especially private ones. We’ll get into that in tomorrow’s editorial.