As President Barack Obama was traveling to speak at several colleges Tuesday about the potential doubling of student loan interest rates, he and his staff took time to ask for help from college journalists.
With the current rate at 3.4 percent set to double to 6.8 percent by July 1 if a law passed by President George W. Bush in 2007 is not extended by Congress, graduates could face footing the bill at a cost of more than $1000 extra per year.
“The bottom line here is we just can’t cut our way to prosperity. Making it harder for our young people to afford higher education, allowing them to earn their degrees; that’s nothing more than cutting our own future off at the knees,” said Obama on a conference call from Air Force One about the measures that Congress has taken to evade his attempts to make college more affordable for middle class families.
“I need your help on this,” he said to reporters.
Not all lawmakers are quite so willing to offer students a handout when it comes to the costs of education.
“Student loans are not free money,” said U.S. Rep. Dennis Ross (R-Fla.). “Students need to understand that if you take out the equivalent of a mortgage for your education, you better choose a line of study worth the investment.”
Ross, who sits on the U.S. Education and Workforce Committee, said students are relying on a third party to pay for education without thinking about the bill or weighing the cost/benefit of the school or field of study.
He said, “Students need to take a long hard look at where they are going, the costs and the earning potential down the road.”
A study released by the Associated Press Monday showed more than half of all students who graduate from college are “jobless or underemployed,” and in 2010, students who utilized loans accrued $25,000 of debt on average according to a White House press release.
With the possibility of vast debt for students after graduation, and the reality of not being able to pay back what is owed, there are ways to justify the cost of an education. Job creation and employment has been on the slow rise for the past three years according to a Gallup U.S. Job Creation Index. April 6 the Department of Labor Statistics reported 120,000 jobs were created in March and the national unemployment rate remained steady at 8.2 percent.
Acquiring skills that can carry over into the workforce are a major justification for taking on debt to pursue education. Cecilia MuÃ±oz, director of the White House domestic policy council said students who have a college degree earn twice as much as those who do not. “A college education is exactly the way to make sure that people are prepared for the jobs that are coming online for the future,” she said.
MuÃ±oz also said that pushing Congress to continue with the current loan rate is only part of the initiative to keep the cost of college reasonable that includes increasing the amount and availability of Pell Grants, working with state governments and expanding on the American Opportunity tax credit, which covers a maximum of $2,500 worth of tuition, fees and materials; forty percent of which is refundable.
States utilize Pell Grant money, which is awarded by the federal government. Florida state universities received almost $785 million in Pell Grant funding in the 2010-2011 school year. The number of baccalaureate degrees given to Pell Grant recipients in state universities has grown from just over 15,000 in 2005-2006 to over 20,000 in 2010-2011.
The state is also making room for the wave of new graduates entering into the workforce. The Department of Economic Opportunity said in an April 20 press release since the inauguration of Gov. Rick Scott in 2011 over 100,000 private sector jobs have been created, with 10,800 in March alone.
In the release Scott said “By signing a budget that devotes more than $1 billion to education, Florida is positioning itself to have a globally competitive workforce.”
The governor’s office was unavailable for further comment.
Obama said that the thing for Congress to do is act in the interest of the economic future of the U.S. instead of offering tax breaks to the rich, which then cut from education and job training.
Ross said if the vote were today he would not allow the interest rate to remain at 3.4 percent; and by propping up the system with a four-year break on loan rates, the government creates the urgent environment of an increase and the need to find cuts in other sectors.
“We need to get the federal government back in the mode of being the guarantor to some loans, but not a lender,” he said warning that extending the “artificial” interest rate would only do more long-term harm.