President Obama’s focus on student loans in speeches to college students this week was a naked attempt to win over a voting bloc crucial to his re-election. Beyond that, however, the president had the advantage of being right.
The cost of a college education is out of hand. And with that, the indebtedness borne by graduates and their families has become a national crisis.
Obama spoke Tuesday in speeches at the University of North Carolina in Chapel Hill, and on Boulder’s University of Colorado campus, and on Wednesday at the University of Iowa. The immediate issue he addressed was the scheduled doubling of interest rates on federally subsidized student loans. Called Stafford loans, they currently carry an interest rate of 3.4 percent, which is set to increase July 1 to 6.8 percent.
Obama would stop that increase – as would former Massachusetts Gov. Mitt Romney. Neither has said how he would cover the $6 billion projected cost of keeping those loan rates low.
Both predictably focused instead on the other’s purported failings. Romney says Obama’s mishandling of the economy caused the problem. Obama says Romney’s support of deep budget cuts will make things worse.
What matters, and what should cheer parents and students alike, is this: Both presidential candidates would stop the rate increase, and both are talking about the importance of making it possible for prospective students to go to college. We can argue about how to proceed, but what is important now is to agree on how important access to higher education is to the future of the nation.
The numbers are daunting but clear. Total outstanding debt on student loans has now topped $1 trillion, which is more than Americans owe on credit cards.
Unlike much credit card debt, however, student loans are rational investments. On average, workers with a bachelor’s degree have lifetime earnings 84 percent greater than those holding only a high school diploma. Bureau of Labor statistics also show lower unemployment rates for college grads. From March 2011 to March 2012, unemployment among high school graduates topped 10 percent. For dropouts, it was more than 15 percent. The highest rate for those with a bachelor’s degree was 4.4 percent.
The escalating cost of college threatens all that, as well as the financial health of American families – and families to be. How to – not whether to – ensure every student can afford college is a worthy topic for a presidential election.