Like a glass of water to a traveler stuck in the desert, Barack Obama’s recent student debt relief plan is seen by many college graduates as a saving grace after so much heartache caused by crippling student loans. However, although a few drops of water is refreshing and alleviates the most dire, short-term effects of dehydration, it doesn’t solve the fundamental issue of being stuck in the desert. Like the glass of water, the recent plan can only take the edge off the pain of large student debt bills for those who cannot pay them, but it does not change the fact that student debt stands at over $1.2 trillion and is set to increase ever higher.
The bill offers to increase “pay as you earn” plans, meaning that anyone with federal student debt taken out after 2007 can have the payment rate capped at 10% of the borrower’s income, with the remaining balance forgiven after 20 years. This addresses a few issues; for example, the impact on people unable to take out loans for a home or who are unable to spend money on basic goods due to crippling student debt payments. This plan, however, fails to address several important issues.
The plan does nothing to curb the skyrocketing cost of attending college. Bloated administration budgets, as well as inflating campus beautification projects, are driving tuition rates and other fees up without any sign of slowing down. Median student debt is set to pass income by 2023, which poses a major threat not only to the US economy, but the world economy it is a component part of.
The plan affects only those with federal loans and does not make any difference to people with private student loans—which constitute approximately 20% of all such loans and are generally taken at a higher interest rate—leaving these students in the same precarious position as before.
The plan also does not address the enormous amount of student debt as a whole. Currently standing at more than credit card debt, this massive bubble threatens to burst on an even greater scale than was experienced in 2008. With many college graduates lacking good-paying job opportunities and with hundreds of thousands working for minimum wage, the potential for default on many of these loans continues to grow, regardless of the “pay as you earn” plans.
Due to the calamity of the student debt crisis, more people are now opting out of college than they did in the past. A less-educated population is a less productive one. The increasing college costs are a benefit to no one, save those tiny few who make enormous amounts of money through these establishments. In a distorted way, private universities are, in effect, being subsidized by public funds through the federal loans.
Expropriating all of the universities and colleges to be run under one socialized education system would decrease bloated administrative costs. Through the nationalization and democratic planning of the entire banking and insurance system and the rest of the Fortune 500 companies, a workers’ government could forgive all student debts and allow us to use the vast amount of wealth in society to provide everyone with quality education and much more.
No more bandages for mortal wounds—we need real solutions!
Forgive all student debt, and provide free, quality higher education for all!