Make universities responsible for loan education
For some VCU students, April represents the final sprint toward graduation and the fabled “real world.” It’s an exciting time, an optimistic time and a long-awaited end to their college careers.
But for some, this final sprint represents a time of impending doom.
As students become graduates, the time for student loan payments begins. Unless Congress acts, interest rates on student loans will double this July, going from 3.4 percent to 6.8 percent.
With about 37 million Americans owing loaners a little more than $1 trillion in student loans, the financial stakes have never been higher. Inaction will mean untold financial hardship for millions of Americans, including decreased purchasing power, increased reliance on government social assistance programs and a weakened middle class.
Student loan debt is the second largest form of consumer debt in America. Although it may seem like student debt, the majority of which comes from private student loans, is an individual’s choice and solely their responsibility, the government has a responsibility to get involved because of the stakes involved and potential for disaster if nothing is done. American students, for all intents and purposes, are the next “too big to fail” cause for bandwagon politicians to rally around.
To counteract the potential disaster, Democratic Representative Karen Bass of California has proposed the “Student Loan Fairness Act” (SLFA).
Under SLFA, interest rates would be capped at 3.4 percent and students would only have to pay their loans back for ten consecutive years.
In Washington, politicians tend to bandy about the talking point that we “shouldn’t be passing on debt to our children,” usually in reference to government spending or federal expenditures. They should also include the various forms of consumer debt in that particular talking point.
The hypothetical “our children” are already here. They’re in high school and college right now. They’re walking up a platform to receive their degrees right now.
Members of Congress often talk about the future of this country but don’t act enough to save the present.
Right now, there are too many voices lobbying for too many issues. The result is that we have a multitude of visions, but an unclear focus and no real plan.
Ideally, President Barack Obama should be the one issuing that plan, but a divisive political atmosphere of filibustering and issue-derailing has contributed to us having a less-than-effective leader.
So where will salvation come from, if not from legislators?
College administrators need more incentives to set students up for success in their post-graduation lives. At VCU, there are an innumerable amount of financial aid and loan education information sessions throughout the year. Admissions and financial counselors can also meet with students at any time. The resources are available and are being used but not in an evaluative way.
Universities aren’t being evaluated by prospective families by the true cost of attendance, but rather by the current cost. Prospective students won’t necessarily take into account the annual tuition raise or increases in the price of housing or interest on loans.
To that end, administrators can mandate incoming or freshman students take a course on loan education. Making such a course a prerequisite for attendance may end up dissuading students from attending college altogether, but it’s better for us all that they know the risks up-front.
The Project on Student Debt found that in 2011, VCU students graduated with an average of about $27,000 in loan debt, almost $3,000 above the state average.
We don’t advertise that fact, but maybe we should. As a public institution and a school that makes pride in our inexpensive tuition (relative to the region), we have a responsibility to be accountable and transparent with taxpayers and prospective students. If universities were held accountable for the post-graduate success or well-being of students, they would do a better job with being efficient.
As much as we like to think of universities as meccas of academics and learning, a college degree is increasingly valued by market prices, rather than the quality of knowledge garnered.
We are part of the student debt crisis and we can be part of the solution by letting students know up-front the consequences of enrolling.