Romney’s Student Loan Policy Under Heavy Fire
by Ben Seidman | University of Michigan
Mitt Romney’s recently unveiled student loan plan, which would invite private lenders to reenter student loan market, has undergone immense criticism in examinations by experts in higher education.
Romney’s vision suggests an intention to create a government-subsidized student loan sector in an effort to instill efficiency in the current system. On the contrary, leading experts suspect that Romney’s plan will instead serve to benefit Wall Street, the same firms in operation prior to Obama’s abandonment of the old system and the instituting of government oversight over student loans, according to reporting by The Boston Globe.
Graduates of higher education in 2010 reportedly sustained an average of $25,250 in student loan debts as economic baggage as they left college. Simultaneously, unemployment for college graduates has reached its highest rate on record at 9.1% for those aged 20 to 24, according to data from The Project on Student Loan Debt.
The Director of the Federal Education Budget Project at the New America Foundation, Jason Delisle, believes the old approach of private lending had gone on for too long even before Obama abandoned that direction.
“The old guaranteed loan program was rife with lobbyists and will go down in history as a system that existed far longer than it needed to simply because it was enriching private companies,” Delisle told The Boston Globe. “What’s in it for students or taxpayers? Nothing.”
Delisle’s point, in addition to scrutiny from other various pundits, has provoked the public to question how college can be economically feasible for students with worries for their financial security in the current student loan climate.
Brenden Magnan, a senior at the University of Michigan planning on going to medical school following graduation, said he dreams of the day when he might be done paying off student loans at the current rate.
“The cost of education in itself is a fortune,” said Magnan. “I support any policy that works to aid students who are working to become the leaders of tomorrow. Creating a competitive and capitalistic student loan sector should be an afterthought to student aid.”
Magnan added that taking out a student loan these days is almost a risk with the uncertain job market that awaits him, even as he aims to enter the economically dependable field of medicine. Experts including Karen Carlson, director of education for InCharge Debt Solutions, a credit counselling organization, echoed the senior’s concern.
“If you take on a huge student-loan debt, it can cause financial catastrophe if you already have a lot of debt in other areas, such as mortgage, credit card and auto loans,” Carlson told The Orlando Sentinel. “It will hit especially hard if you lose your job, have health issues or face other unexpected events.”
Even so, there are provisions that can be made to ease student loan anxiety and steer clear of the debtor’s prison.
Bill Hansen, a close adviser to Romney on higher education, said that government subsidies for private lenders have not been decided as of yet and that it remains uncertain as to how much Romney’s student loan plan might cost the average taxpayer. Nevertheless, Romney’s campaign continues to deny allegations that this stance was motivated by interests to boost the private sector.
“The bottom line is we’re trying to design a better program that would hold default rates down, holds excessive borrowing down, and creates a better marketplace to help students and families, and not be so government-centric,” Hansen, former deputy secretary of education for President George W. Bush, told The Boston Globe. “The current framework is a one-size-fits-all government solution that will never be customer-friendly and is totally subject to the political winds of the day.”
Even with criticism of Romney’s plan, the current student loan situation is in disrepair with debts on an upwards of one trillion dollars.
While his plan to reincorporate the private sector is a better alternative than a government dominance over student loans in the eyes of Richard Vedder, a professor of economics at Ohio University and director at The Center for College Affordability & Productivity. Vedder told The Boston Globe he believes that Romney’s plans fail to acknowledge the problem in the larger scheme of things, including the soaring cost of higher education and the pitfalls of career prep for graduates.
In 2010, 67% of graduating seniors exited college with student debt, according to The Project on Student Debt. Thus, the magnitude of this policy for the next four years and looking further into the future will directly effect at least two thirds of the nation’s graduates.Ben was born and raised on the streets of New York City. Writing is his passion. Keeping people informed about what is going on in the world is his job. Go Blue!