The Real Problem With Student Debt
I was greeted the other day by the charmingly nasal voice of President Barack Obama crackling through my telephone — calling to talk with me (and, surely, an undisclosed number of others) about the importance of keeping student loan interest rates low.
This White House Update Call — planned for student activists working alongside the administration to stop Congress from its planned July 1 raising of the interest rate on student loans — is the latest step in a much larger political campaign that the Obama administration has taken on.
The larger campaign revolves around resolving the student debt crisis; this aspect relates specifically to one part of that.
If Congress does not act, a mandate from 2007 that temporarily reduced Stafford subsidized student loan interest rates for five years is set to expire—which will effectively raise current interest rates from their reduced stature of 3.4% back to their original height of 6.8%.
Congress is currently at a standstill, as neither side will agree upon where to get the funds to subsidize the 6 billion dollars necessary to keep interest rates down.
The Republicans want to cut into Obama’s healthcare plan for funding, while the Democrats want to cut into oil subsidies and corporate tax loopholes. In many ways, it’s the same old story.
Obama has been traveling the country rallying his audience to “keep the pressure on Congress” because “college affordability is a key element in an American economy made to last.”
On the phone I was told to “buckle down” and “take action” because “this next week makes a real difference”. And yet, according to the New York Times, the estimated economic impact from this year-long hike will be about $6 per month per person. The interest rate hike will only last for a single year, if it is passed.
Despite the minimal consequence that this legislation will have on resolving the nearly 1 trillion dollars of student debt — it has become the hot political issue of the moment.
Understandably the issues at stake here are based more on principle than practice—but I fear that this interest rate campaign has been equated with the resolution to college affordability as a whole. And that is very dangerous.
It works to distract the public from the real questions that need to be asked about student debt, while effectively polarizing the country on the issue, through the incessant demonization of the Republicans in Congress. Popular opinion now sees the road to college affordability as one fraught with bipartisan conflict. That isn’t necessarily the case.
By focusing all of our energy on this interest rate increase, we are ignoring all of the other battles that need to be fought: What about targeting rising tuition prices? The underfunding of community colleges? Figuring out how to forgive the debt for the growing number of indebted students that dropped out of college without degrees? Getting rid of student loan interest rates altogether?
Somehow, the fight against raising the interest rate to 6.8% has been equated with a solution for the student debt crisis. It is not. The old aphorism of putting a bandaid over a bullethole rings a bell.
And this issue is of particular importance for us in the Jewish community. Affordable access to quality education has been a foundation of our American Jewish lifestyle and identity. Ian Hainline, the Religion Action Center of Reform Judaism’s legislative assistant, echoes these sentiments. “It is our responsibility and an obligation as Jews to seek a world where students are not hindered by financial hardship” he said in a blogpost for the RACRJ.
He rightly recalls the words of ancient Jewish scholar and philosopher Maimonides, which remind us that “the world only survives by the merit of the breath of school children”.
And so, I wait excitedly for July 1st to pass, so that we can all join President Obama in finally focusing on the more important aspects of the fight for college affordability — a fight that he has wholeheartedly pledged to be a part of (and yes Mr. President, given that college tuitions have increased at a rate higher than inflation, and student debt has surpassed credit-card debt, I will hold you to that).
A message from our CEO & publisher Rachel Fishman Feddersen
I hope you appreciated this article. Before you go, I’d like to ask you to please support the Forward’s award-winning, nonprofit journalism during this critical time.
At a time when other newsrooms are closing or cutting back, the Forward has removed its paywall and invested additional resources to report on the ground from Israel and around the U.S. on the impact of the war, rising antisemitism and polarized discourse.
Readers like you make it all possible. Support our work by becoming a Forward Member and connect with our journalism and your community.
— Rachel Fishman Feddersen, Publisher and CEO
