OP: What you might need to know about handling student loans

While a relatively small part of last week’s debate, the issue of rising tuition and student loan debt is one of particular importance to students. According to the College Board, those graduating in 2016 and 2017 did so with an average of $28,500—this number not including any debt accrued by parents in the form of Parent PLUS Loans. 

During the second debate Sen. Elizabeth Warren and Sen. Bernie Sanders both reaffirmed their intentions to forgive American’s student loan debt. Warren’s plan would see the forgiveness of up to $50,000 for households making less than $250,000. Sanders’ plan would forgive $1.6 trillion in debt affecting nearly 50 million Americans.

In contrast with the wide forgiveness promised by Sanders and Warren, Sen. Kamala Harris proposed a more reserved plan that would forgive the debt for those who operate a business for three years in a disadvantaged community, among other requirements. Her plan has been criticized for being too restrictive while Sanders’ and Warren’s plans have been criticized for their cost.

A study by the Pew Research Center finds that Millennials and the oldest members of Generation-Z will make up a majority of the electorate in the 2020 election. These two generations are the most affected by student loan debt and tuition hikes and as such the issue may be critical in the 2020 election. Early polls show Sanders and Warren as frontrunners for young Democratic voters.

It may seem foolhardy to take politicians at their word, taking their explanations of how their policies ought to turn out as accurate representations of how their policies will turn out. But policies are not proposed in a vacuum, democracy is done in increments—tweaking, expanding and sometimes even reversing what has been tried in the past—and following a policy’s family tree, seeing how its parent’s turned out, can often give clues to what it may truly become. The proposals currently being debated among Democrats have a political lineage tracing back both stateside and abroad.

As with anything, choosing a beginning can be difficult, but it is a matter of record that tuition costs began to rise in the United States around World War II. Time magazine attributes this rise in costs to the changing nature of college. College, which was once used to prepare a student for low paying career in research or ministry, was now preparing students for high paying professional careers in business, engineering and industry.  

FDR

FDR's 1944 Presidential Portrait

In 1944 Franklin D. Roosevelt signed the G.I. Bill. In doing so, veterans were promised to have their tuition waived, up to $500 a year. This was the first instance of federally managed free tuition, limited as it may be, and it came at a time when nearly 10% of the U.S population had served or was currently serving in WWII. Later additions to the bill following Vietnam and 9/11 would expand its benefits and make them permanent.

Abroad several countries already offer free undergraduate education. In Denmark, France and Malta university attendance is typically free to members of the European community. College degree holders make up 44% of those in their mid-twenties to mid-thirties in the United States according to census data. Denmark and France sit at the same level, but personal debt levels are significantly lower. According to reports by the Organisation for Economic Co-operation and Development, these programs have been effective in encouraging economic mobility and decreasing opportunity gaps.

In Germany attendance is free for both European and international students. An outlier, Germany sits at 28% degree attainment; OCED notes that this is due to Germany’s vocational programs which house nearly half of all German students. According to OCED, many jobs that require a college degree in the United States instead require vocational training in Germany.

Stateside, several states offer various levels of free tuition. In California, free tuition is limited, only applying to those who are first time students attending a community college for the first time. Much like Harris’s proposal, a major criticism of the program is its restrictive nature. Some Californians say that the program does not help the people who need it most.

New York offers a less restrictive program than California’s. The program, known as the Excelsior scholarship, is said to provide free tuition for all students from households making less than $125,000 and, according to the governor’s office, affects around 940,000 families. However, like in California, this program only applies to those whose circumstances allow for full-time attendance. As such, it too has been criticized on the premise that it does not benefit the people who need it most.

Student loan forgiveness already exists on a federal level, but like the tuition programs in California and New York it comes with a host of caveats. The program forgives the debt of those who work as teachers or in a public service capacity (in government or for non-profits) and who make at least the minimum payments on their student loans for 10 years. This program has been in the spotlight recently with rejection rates at more than 95%. Department of Education officials have blamed a lack of funding for the high rates of rejection.

In order to fund their proposals, both Sanders and Warren have also proposed increased taxes on the wealthiest Americans. However, if their proposed tax plans fail to pass through the legislature the current forgiveness rejection crisis could perpetuate at a larger scale.

 

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