President Joe Biden has taken steps to tackle the student debt crisis.
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It's created a system of unchecked borrowing, and with PLUS loans having the highest interest rates of 6.28%, parents are often stuck paying off debt for the rest of their lives simply because they wanted to give their kids the best future. Parent PLUS loans are federal loans parents can take out to finance their kids' education, and the loan can cover up to the cost of attendance and is not based on income. It's even worse for parents who want to give their kids a chance at higher education. "I feel like I've actually been responsible, and I've paid a considerable amount of money on my student loans," Wise told Insider. Due to high interest rates, if the borrower does not make sufficient income, it could be very difficult and sometimes impossible, for the borrower to pay off even the original loan amount.įor example, David Wise, 59, originally borrowed $79,000 in student debt, had paid off $175,000 of it, and still owes $236,485. The average American holds about $32,000 in student debt after graduating. You could pay it back out of your future income."īut looking back, when asked what she thought of how the loan industry turned out, Rivlin told Mitchell: "We unleashed a monster."
It created a trap for students across the country, as Mitchell explains: The more colleges raised tuition, the more Americans had to borrow, and the more Americans had to borrow, the more colleges raised tuition.Īlice Rivlin, the first Congressional Budget Office head tasked with crafting Johnson's student-loan program, told Mitchell in 2019 that the idea behind federal loans was that "higher education added to your future income and therefore loan finance was a sensible thing. Colleges kept raising tuition as more federal aid became available. To fulfill his goal of universal access to education, he signed the Higher Education Act of 1965, which guaranteed loans for the middle class.īut after the Act's passage, banks began raising interest rates on student loans and the system came to profit lenders while borrowers accumulated more debt. Johnson, well known for his war on poverty, expanded the education system in an attempt to give everyone a fair shot at college - a core pillar of the American Dream. Government involvement in US education is hurting the people it intended to help What started as an altruistic educational pursuit has now become a full-fledged crisis. Today, the average annual out-of-state tuition for a public university is $15,000, fewer and fewer people are enrolling in college as the nation's student-debt load stands at $1.7 trillion and grows by the day. Higher costs must not put higher education out of reach." "The challenge is obvious and we must meet it. "Now, ladies and gentlemen, this just must not continue," Johnson added.
But there was still more to do to tackle affordability, Johnson said, noting that Americans were spending $4,000 to $5,000 on each child's college.
Johnson said in 1964 remarks that more than 600,000 additional students had gotten access to education thanks to the NDEA's student-loan program.
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"It is no exaggeration to say that America's progress in many fields of endeavor in the years ahead - in fact, the very survival of our free country - may depend in large part upon the education we provide for our young people now," the House report recommending the bill's passage stated. In other words, Sputnik spurred the creation of the federal student-loan program, as detailed in " The Debt Trap," a new book by Wall Street Journal reporter Josh Mitchell. It was later amended to remove restrictions on fields of study. Congress stepped in and created the National Defense Education Act (NDEA) at Eisenhower's request, which allowed the government to give loans to students in science and mathematics fields.
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