The Irascible ProfessorSM
by Dr. Mark H. Shapiro
"He that dies pays all debts." ....Shakespeare. (That was before the era of student loans. ....The Irascible Professor.)
Commentary of the Day - June 26, 2013. The Student Loan Interest Rate Controversy. Guest commentary by Alan Collinge.
2013, Alan Collinge.
Alan Collinge is the founder of http://StudentLoanJustice.org, and the author of The Student Loan Scam.
The Irascible Professor comments: One might be tempted to dismiss Alan's comments as just another rant by someone who has been caught up in the college loan mess. But the IP thinks that Collinge makes some good points even though he doesn't agree with everything said in the article. First Alan is completely correct in noting that the overall level of student loan debt is out of control. The IP would add that it is out of control both on an individual basis and on a collective basis. Financial aid for individual students has shifted from grants and scholarships to loans, and loan limits are unreasonably high. Collectively, student loan debt now exceeds $1.1 trillion. In the long run, this threatens economic stability. The cost of a college education needs to be reined in. The easy availability of student loans has allowed college administrators to engage in all sorts of questionable activities that raise the costs to students, and have seduced state governments into reducing their contributions to public higher education.
Second, those people who were forced to take out large private student loans before the bulk of student lending was returned to the federal government need some relief from the onerous repayment conditions that leave many of them in what amounts to involuntary servitude to the lenders and the collection agencies. These people need to have the protection of bankruptcy returned to their loans, as well as limits on late fees, and the ability to refinance their loans at low interest rates. Likewise, the student debt of those who die before repayment should be cancelled rather than made a burden for their parents.
But, the IP does not agree with Alan that the recent reforms of the student loan process have been mere sideshows. Returning the bulk of student lending to the Department of Education has reduced overall costs. And other reforms such as better forbearance terms, and limits on the maximum monthly payments have helped many people. Yes, much more needs to be done, but given the current gridlock in Washington the IP thinks that what has been accomplished is a step in the right direction; and, keeping the interest rate for subsidized loans at 3.4% one more small step in the right direction.
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