It’s time to fix the student debt crisis, says former education secretary
Student loans remain a significant hurdle for almost all college degree holders.
For those currently struggling under the weight of student debt, President Joe Biden has used his executive powers to extend the pause in federal student loan repayments until September.
Nearly 43 million federal borrowers are hoping that mass student loan forgiveness could be Biden’s next major move on the debt problem.
“We have an opportunity to make this a New Deal moment,” John B. King Jr., who served as education secretary under former President Barack Obama, told a summit on the subject. organized by the Student Debt Crisis Center.
Learn more about personal finance:
Free college is now a reality in nearly 30 states
Millions of defaulting student borrowers get a fresh start
Student loan repayments won’t be due until September
President Franklin D. Roosevelt’s large-scale relief programs in the 1930s, aimed at restoring financial well-being after the Great Depression, fundamentally changed the role of government in the lives of Americans.
A broad loan forgiveness under Biden would be a modern parallel to these New Deal policies, he said.
This is “a time for our country to address some of our deepest systemic challenges and correct the policy mistakes of the past 40 years,” King added.
Since the 1980s, declining public funds have caused tuition fees to skyrocket, leaving many families either with insurmountable student debt or unable to afford a higher education.
In four-year private schools, average tuition fees have increased by 213% over the past 40 years. Tuition and fees in public four-year schools have risen again – 300% over the same period.
Including room and board, books, and other expenses, families with students at private four-year colleges now spend about $55,800 a year in 2021-22; at public four-year colleges, it’s over $27,300, according to the College Board.
Most make it work through a combination of resources including income, savings, scholarships and loans, the latter of which brought the country’s outstanding student debt to more than $1.7 trillion.
Yet nearly two-thirds of parents worry about being able to cover the cost of higher education, according to a separate report from Discover Student Loans.
“We haven’t focused, as a society, on how the student loan system is not achieving the goal, which is that higher education is a pathway to opportunity for all Americans,” he said. said King.
“That’s the fundamental data point that we seem to ignore.”
Subscribe to CNBC on YouTube.