Rep. Keith Ellison, D-Minn., refers to education as an investment in social good. In an effort to promote that social good, Ellison, along with President Barack Obama, have embarked on a campaign to prevent student loan interest rates on Federal Stafford loans from doubling this coming July.
Student debt has hit an all-time high, topping $1 trillion last year. Student debt has now surpassed credit card and automobile debt. It remains a burden for many students years after they have left campus. In Minnesota, the average student debt is around $29,000. In an era of austerity and a still sputtering economy, this debt represents a burden not only to students but to the economy as a whole.
Student debt throughout the U.S. has compelled recent graduates to put off choices such as home-buying, marriage and childbearing. One in four young Americans has moved back in with parents after having lived elsewhere. The delay of such choices has an impact on the overall economy causing some to call student debt a new “bubble.” While Ellison’s call to keep student interest rates low is the right move, there may be a better long-term solution.
Earlier this year, Rep. Hansen Clarke of Michigan introduced the Student Loan Forgiveness Act of 2012. The Act would forgive the debt of students who have paid 10 percent of their discretionary income toward student loans for 10 years and cap student loan interest rates at 3.4 percent. It also forgives the debt of those who go into teaching, public service or practice medicine in hard-hit areas after five years. This act represents a common sense approach to the growing problem of student debt that may handicap the nation’s economy for years to come.
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