Will Loan Forgiveness Offer A Long-Term Student Debt Solution?

Careeer College Central summary:

  • Student debt in America has more than tripled in just the past decade, and experts say too much debt can put a crimp on graduates’ futures. It’s an issue that Democrats, particularly the president, have targeted for new remedies. It was the focus of his latest executive action today. It’s the season for pomp and circumstance, triumphant graduations, cap-tossing, and a reminder that, although college may be over, the bills are just now coming due.
  • The average student who graduated last year had nearly $30,000 in student loan debt. Today, in the White House East Room, President Obama signed an executive order that would allow borrowers who took out federal loans prior to 2007 to tie their repayments to their incomes.
  • Americans are now carrying student loan debt of over $1 trillion, $125 billion of it added just in the first three months of this year. Some Republicans criticized the president’s plan today. Senator Lamar Alexander of Tennessee told The Wall Street Journal: “I still haven’t found the authority for the president to do this. And there’s very likely to be a cost in this and we need to know what it is.” So what, if anything, could this approach do to help ease the growing problem of student loan debt?
  • For that, we turn to Deanne Loonin, who leads the student borrower program at the National Consumer Law Center. And Richard Vedder, professor of economics at Ohio University and director of the Center for College Affordability and Productivity. Gewn Ifill of PBS spoke with Richard Vedder of Ohio University and Deanne Loonin of the National Consumer Law Center.
  • IFILL: Professor Vedder, today, I was talking to a recent college graduate who says she owes $100,000 in school loans. She just graduated last year. How deep, how wide is this problem?
  • RICHARD VEDDER, Ohio University: Well, that’s a little atypical for an undergraduate to graduate with $100,000 in debt, but it is a significant problem when you have 40 million Americans having debt to the government, and this debt now is greater than the debt on car loans, on credit cards, home equity loans. This is the largest form of debt in the United States, except for home mortgages. So it’s become a widespread issue, and it’s not surprising that it’s surfacing as a political issue in this election year.

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