Tackling student debt

There are many ways Congress could aid college students in limiting loan debt.

Ronald Dixon

As we ended our first month of summer vacation, the federal student loan rate doubled from 3.4 to 6.8 percent. This means that for future loans we will need to spend twice the amount on interest payments as we begin to pay back the thousands of dollars needed to obtain our diplomas.

Thankfully, though, there is a shimmer of hope.

The congressional inaction that led to this increase may be corrected retroactively if Senate democrats keep their promise to propose their own solution. However, the rate increase will continue to harm the vast majority of college students if Congress does not act soon to pass legislation.

This is especially important when considering the fact that student debt has a negative impact upon the economy and the lives of future graduates.

As the total debt for all college students exceeded $1.1 trillion not too long ago, recent graduates are delaying basic life steps. These include obtaining a car, renting a house and starting a family. Not only could this have a psychological impact upon young adults, but it also prevents these recent graduates from spending, which naturally depresses the economy.

There are many solutions to the student loan dilemma. One potential fix is to bring down the rate to 0.75 percent, the same rate that big banks pay and what Sen. Elizabeth Warren, D-Mass., has been recently promoting.

Another option would be the partial forgiveness of debt via the Student Loan Fairness Act, a bill that requires students to pay 10 percent of their income to student loans but forgives the rest after a decade.

Finally, opening up several debt options to students that they currently do not have, such as refinancing or bankruptcy, could give them the flexibility that may allow them to get back on their feet.

Whichever option, or several options, they choose, Congress needs to act now to prevent more harm to college students as well as the rest of the economy. Additionally, retroactive legislation is the fair solution to correct Congress’ inaction.