PoliticsStudent Debt Became a Political Issue in the United States

Student Debt Became a Political Issue in the United States

Student Debt Became a Political Issue in the United States

Across the United States, more Americans are saddled with student loan debt than ever before. Current estimates place the total student loan debt at over $1.3 trillion dollars, with the average college student now graduating with more than $30,000 in student loans.

Americans with high levels of student loan debt often have trouble getting established after graduation. They may not be able to afford to live on their own after college, with low starting salaries and high student loan payments each month. Many graduates put off major life decisions, such as getting married, buying a house or starting a family, due to the burden of student loans. The increase in student loan debt has had a ripple effect across the United States, as more loans are delinquent or go into default.

There are many factors that account for the rising levels of student loan debt, from tuition and fee increases that have far outpaced the rate of inflation to high interest rates to for-profit colleges and schools. But whatever the cause of the student loan debt crisis may be, politicians across the spectrum are offering ideas of how to deal with this growing problem.

The student loan crisis came to a head in 2008, when the subprime mortgage meltdown resulted in many lenders leaving the private student loan marketplace. As a result, there were fewer companies offering student loans. In 2010, the federal government stepped in, offering loans directly to borrowers. This had the result of allowing more students to borrow money for college. Some have argued that with the easier availability of federal student loans, universities have raised tuition beyond what the market would otherwise support. Others have claimed that for-profit colleges and technical schools have created the problem, leading to students with high levels of debt and an inability to earn enough money to pay back their loans.

With a greater number of students facing ever-higher levels of debt, it is not surprising that politicians got involved in the matter. The Consumer Financial Protection Bureau, which was established in 2010 in response to the 2008 financial crisis, has received a large volume of complaints about student loan servicing companies. Many borrowers have alleged that these companies engage unfair and deceptive practices. This issue is of high importance to many young Americans and their families, leading to calls for politicians to meet the problem head-on during the 2016 election season. Democratic Senator Bernie Sanders brought significant attention to the issue as he competed to secure the nomination during the primaries. His focus on student loan forced other politicians to follow suit, making the question of how to handle rising student loan debt a focus for all candidates.

Student loan debt has been a hot topic in the news, as the American political landscape continues to shift. President Trump’s selection for Secretary of Education, Betsy DeVos, has faced high levels of scrutiny over her inexperience with student loans. Ms. DeVos admitted under questioning from Massachusetts Senator Elizabeth Warren that she has no experience in running a bank or a loan program, and that neither she nor her children have ever taken out a student loan. Senator Warren made a name for herself by introducing a bill for federal refinancing, an option only available in the consolidation market with companies like SoFi. However, Senator Warren’s bill failed to pass. Ms. Devos’ connections to student debt collection company Performant have also raised eyebrows on Capitol Hill, with some legislators questioning whether a person who has financially benefitted from student loan debt can be unbiased in her role as Secretary of Education.

Indeed, the question of student loan debt has revealed deep partisan divides. Republicans want to remove the federal government from the student loan business, moving to a purely private model where students would borrow from banks and other lenders rather than the government. They claim that doing so will drive down tuition costs by encouraging competition. Critics argue that this plan will not decrease tuition costs, and will ultimately harm students by making student loans unaffordable and less accessible. On the opposite side of the aisle, Democrats want the government to take more action to make college far less expensive for all Americans. Their plan would make tuition free at public colleges and universities for families earning under a certain amount, and would allow greater protection for borrowers, including the ability to discharge student loan debt in bankruptcy. Conservatives argue that this plan is unaffordable and unsustainable.

In these early days of the Trump administration, much is still unknown about the future of student loan debt in this country. But with students continue to amass debt at record levels, it is sure to be an issue for politicians for many years to come.

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