Students are fed promises of a bright future, and expectancy of a higher income upon program completion. However, college graduates in the United States face debt that has now reached a whopping $1.1 trillion total. This amount surpasses credit card debt and is second in household debt only to home mortgages. The average owed for student loans is more than $26,000, and one in eight borrowers owes more than $50,000, according to the Consumer Financial Protection Bureau. (credit.com, May 13)
Meanwhile, graduates also face difficulties finding full-time, adequately paying jobs, and have an 8.8 percent unemployment rate. (marketwatch.com, May 16) The rate of unemployment is even higher among women and graduates of color.
On July 1, interest rates on subsidized student loans are set to double across the country from 3.4 percent to 6.8 percent if Congress cannot successfully strike a deal. Republicans would like to implement a variable interest rate which would fluctuate, while Democrats only want to extend the 3.4 percent rate for two years minimum. Neither solution is in the interest of students, as both proposals continue to allow big banks to profit off of students who seek college as a means to a secure future.
Student advocacy groups in April demanded an end to the federal government profiting off student debt. They cited a February Congressional Budget Office report that shows the government pockets 36 cents for every dollar borrowed by a student, which will amount to $34 billion in profits next year. (nytimes.com, April 8) Terry Hartle of the American Council on Education stated, “If the numbers are accurate, the government will make more money on student loans than Ford makes on automobiles.”
According to projectonstudentdebt.org, students graduate with an average debt of $27,000, with the suggested interest rate increase tacking on an estimated $1,000 in extra debt every year. Some 6.8 million federal student loan borrowers are college grads who are currently in default on $85 billion in debt. This, coupled with high unemployment and underemployment, forces grads to move back in with family as they are ineligible for loans to finance housing of their own.
This is the inherent nature of a capitalist economy in financial crisis, that must sustain itself by shackling students and other working-class people to debt payments before they can even enter the workforce.
The perpetuation of profits over people does not cease there. Undergraduate and graduate student loans have tripled since 2004, according to the Federal Reserve Bank of New York. However, big banks that take in trillions of dollars are allowed to borrow from the Federal Reserve at a mere 0.75 percent interest rate.
The National Organization for Women and other groups are supporting Sen. Elizabeth Warren’s proposal, the Students Loan Fairness Act (S. 897), which would cancel the July 1 student loan interest increase, and reduce the interest amount to the rate that banks pay. While this alone will not alleviate the overwhelming debt faced by students, it is a step in the right direction for working-class students who continue to suffer tremendous financial pressure and a future of debt.
Students and youth have every interest in fighting for a socialist future, where accessible, quality education through the graduate levels will be a guaranteed human right free to all, and not a commodity for profit at the expense of people.