Editorial: Evolving federal student loan policy prompts questions

Between exams, papers and projects, college students must keep their eyes on the future, or, more specifically, their future college debt. In fact, student loan debt is at a record high of $1.1 trillion, while the average undergraduate borrower finishes school with almost $30,000 of debt.

Now, however, there may be hope for college students facing such debt. 

A Jan. 24 New York Times article signals that there might be hope for such students. Legislative tweaks over the past decade may make borrowing money less of a burden on students, as the federal government starts accepting a larger role in lending money to students.

The federal government began offering generous subsidies to private banks in the 1960s, according to The Times. These banks would then loan money to students. But, in the 1990s, President Clinton allowed students to directly borrow from the U.S. Department of Education. If students took this option, they became eligible for an income-based repayment program that limited loan payments to 20 percent of the borrower’s income. Furthermore, any remaining debt after 25 years of payments was forgiven — which was not an option for those borrowing from private banks.

Federal student debt policy continues to evolve today. In 2007, the federal government established a new Income-Based Repayment program, which means you pay more if you make more, and lowered the cap of monthly payments to 15 percent of income, rather than the previous 20 percent. Additionally, the federal government would wipe out any remaining loan balances after just 10 years.

Moreover, following the 2010 Affordable Care Act, the federal government no longer continued to subsidize private banks, with IBR rates becoming more generous to students.

Such IBR and generous loan forgiveness programs appear attractive to college students, and the federal government should certainly address the growing student debt phenomenon plaguing America’s young adults. However, we must remember that such programs are financially costly to the American people as well. 

Balancing student loan generosity and being fiscally responsible is a challenging and complicated task. 

As concerned students and citizens, we must ask of our leaders, how much will these generous programs cost? Already dealing with more than $18 trillion of its own debt, is the federal government in a state to liberally lend out more money to students and ask for less in return?

Instead of creating a system of lending and owing large debts, the government should help to establish a society in which higher education is affordably priced for all of its citizens. Alternatively, it is the federal government’s responsibility to students today and tomorrow to not continue to plunge the country deeper and deeper into the red.

Today, we cannot decisively say whether or not the federal government is or is not capable of fiscally responsibly carrying out its liberal student debt initiatives. However, it is of the utmost importance to society that students think deeply about the federal government’s role in aiding them in paying back loans. The first step in doing so is asking these questions. The more we ask, the closer we get to finding effective solutions to curbing student debt.