We hear constantly from politicians and candidates for office that young people are our future, and that we need to invest in our future if we want to grow our economy, and if we provide more training and education we can boost people out of poverty. So on, and so forth.
I agree with all this – being a young person and recent college graduate, I can attest to the earning power of a college degree. And education should be more accessible and affordable. But it never ceases to amaze me how a candidate will appear so concerned with courting the youth vote, but won’t actually do anything to earn their votes.
Never has that been more clear than today: because of Congress’s inaction on student loan reform, the interest rates on federal student loans will double, jumping from 3.4% to a staggering 6.8%.
Part of the problem is that government (and most voters) don’t see a student loan hike as a far-reaching economic problem. They see it as affecting a small percentage of the population, a population with lower voter turnout than most and a percentage of the population expected to either suck it up and borrow from the bank or their parents (if they’re able) or to forego college altogether.
Clearly, the first group of people affected by this rate jump is college kids. On average, college students take out loans and graduate from four-year universities with around $27,000 worth of debt). So before day one their careers students are already digging out of a hole instead of laying the foundations for a productive and successful future. Since wages have remained stagnant over the past few years, these graduates are not making enough to put away any savings and they’re not making enough to save for retirement. Because college is so expensive, a new subset of the lower middle class is emerging – hard working Americans who will never catch up to their parents in earnings or benefits, a class of workers that will take longer to pay back their loans at higher rates, leaving them less money to contribute to growing the economy.
The next group of people affected: the parents of college kids. When students can’t take out a loan because of bad or nonexistent credit, what often happens is that parents take out loans on the students’ behalf. The parents, though, are also dealing with stagnant wages (if not straight-up unemployment or underemployment). The result: either they cannot help their children get the educations they need to succeed, or they must make huge sacrifices to do so. In the end, both students and families are forced to mortgage their futures for a shot at a better career.
We’re hurting schools as well – by making education less affordable, fewer students will be able to attend college. This can drive a university’s costs up, beyond the obscene tuition prices they already charge, and anyone who has been paying attention understands the implications for professors, administrators and staff, who can suddenly find their own jobs in jepoardy.
The final group hurt by this jump? All of us, really. By raising the interest rates on loans and failing to “invest in our future,” we’re setting ourselves back in terms of productivity, buying power and global competitive edge. If our students cannot afford to go to college, they stand to earn 84% less than their friends who do attend. They will not be qualified for the higher paying jobs in health care, engineering, research, math, and education. They will not make enough to afford even the basics without taking on a second or even third job. And they will not make enough to save, retire on, or spend on homes, cars, clothing and other services that keep our economy on track. More will need assistance and benefits from the government because their jobs will not pay enough or provide those benefits.
By making it so expensive to attend college, we’re hurting students and we’re hurting our economic recovery. To grow our economy and keep the recovery on track, we need to grow our middle class, to pay good wages to working and middle class Americans, and to train more workers for future careers rather than leaving them out in the cold to fend for themselves. By investing in our students, we do our entire country a favor by training the workforce of tomorrow and growing from the middle out.
By failing to act, Congress has made it that much harder for students to get a college education – and by extension, Congress has made it that much harder for students and families to earn more money, get the training and education that they need for a good paying job, and made it that much more difficult for us to keep recovering.