IT IS ENTIRELY natural to have ambitions after college, to have dreams and aspirations for starting a family or landing a desired job. No graduating college student would ever be questioned for wanting to achieve his goals after four years of education, and possibly more if one plans on attending graduate school. After all, education is in a sense a student's launch pad to the world beyond college, training that prepares one to make his way in life.
Yet I often wonder how a nation that prides itself on individual ambition and equal opportunity can simultaneously hinder that ambition with such encumbering student loans. College is supposedly accessible to all, but as student loan debt is currently climbing toward $1 trillion, and students' futures revolve around their monthly debt payments, it is reasonable to ask: Is a decent education worth the debt?
More than 600,000 people recently signed a petition asking President Obama to forgive all current student loans. Although this request was never granted, President Obama has acknowledged the call of desperate borrowers by introducing a revised version of the current income-based repayment program. This "Pay as you earn" option allows those who graduate in 2012 or later to pay 10 percent of their discretionary income - instead of the previous 15 percent - toward their monthly payments, and all outstanding loan debt will be waived in 20 instead of 25 years.
The only eligible borrowers, however, are those who currently have no loans but plan to utilize them in 2012 when the new plan goes into effect. Yet the high unemployment rate and bad economic conditions should inspire Obama to help all borrowers, especially since it would boost his ratings and consolidate the support of college-age voters for the 2012 presidential election. The new student loan plan that Obama did announce, however, is so rife with stipulations that there are approximately 34.4 million borrowers left out. Granted, 1.6 million college students will be eligible to participate, which is certainly an improvement from the 450,000 who use the current plan, but the numerical discrepancy is astounding. If the plan leaves out many of the borrowers because of discrete stipulations, the demands of petitioners have not been met.
President Obama also plans to pay for the new plan at no added cost to taxpayers by "encouraging as many as 5.8 million borrowers with both federally guaranteed student loans and direct loans to move their guaranteed loans into the Direct Loan program," according to Mark Kantrowitz, publisher of the financial aid web sites finaid.org and fastweb.com. If borrowers do qualify and comply, they will be rewarded with a lower interest rate of .25 percent on all their loans.
This policy change will allow the government to receive all interest from the combined direct and student loans, whereas previously it only received part of the interest because students also took out loans from private institutions. Even though the .25 percent interest rate is not available to certain borrowers, by combining the two loans the administration is taking money away from banks and financial institutions, "reducing their profits by returning them to some borrowers who are experiencing financial distress," says Kantrowitz.
Among other steps the administration will take includes introducing a new financial aid form deemed, "Know before you owe," so that students can see what kind of debt they will accumulate if they choose to use student loans. The idea is that after consulting the form students will not borrow excessive amounts that they cannot possibly pay back.
Nevertheless, a low-income student may be discouraged from compiling a list of colleges based on preference because of the projected debt that such a form would forecast. Thus, there seems to be fault with a student loan system that on the one hand encourages students to apply to colleges regardless of monetary constraints, while on the other hand positions students to become discouraged by such constrictions.
Even though Obama's initiatives hold some promise for up-and-coming borrowers, there are always those dissenters who question students' decision to rack up thousands of dollars in student debt. This is especially the case since the students are preparing to face a sparse job market or may lack the necessary tools or knowledge to be competitive in today's globalized society.
Yet it seems that students stand a greater chance of succeeding with the invaluable experience gained in college - namely, the interactions with students from many different backgrounds and the accumulation of a broad base of knowledge. Not all students may land the jobs they desire right out of college, but having a collegiate background gives students an advantage, as well as a greater perspective of modern society that makes them well-rounded individuals. Such a background also proves invaluable when attempting to compete in a globalized world. I think it is time for this country to realize that a good education makes for a progressive society, and if we continue to make college less affordable we will stagnate that progression and prove the naysayers correct.
Devon Darrow's column usually appears Thursdays in The Cavalier Daily. \nShe can be reached at d.darrow@cavalierdaily.com.
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