In the year 2013, the United States government is predicted to make a record $50 billion in profit from the interest collected on federal student loans. This is more than the most profitable company in America, ExxonMobil, which made $44.9 billion in 2012, according to USA Today. During one of the major congressional battles of the summer, the U.S. government successfully passed legislation that tied federal student loan interest rates to the financial market. While this legislation did successfully bring federal student loan rates down, it is expected to cost students more down the road when the financial markets improve.
However, current and past students should have the chance to take advantage of this small window of opportunity and refinance their federal student loans. During the 2012-2013 academic year, undergraduate and graduate unsubsidized federal loan rates stood at 6.8 percent. It was also in this time period that students took out $177 billion in federal student loans. Currently, under the new legislation, undergraduate unsubsidized federal student loan rates are 3.86 percent and graduate federal student loan rates are at 5.41 percent.
The federal government should not be allowed to make outrageous profits from the pockets of struggling students. We have a commitment to education in this country, and students should be allowed to refinance their federal student loans to the lowest levels possible. The money the government is expected to make from student loans will be enough to pay for two-thirds of the U.S. Department of Education’s 2013 budget. It is not the job of students to bankroll the U.S. government.
The federal government should not be penalizing our citizens so severely for seeking an education. According to the Huffington Post, the average person pursuing a bachelor’s degree will accumulate $117,964 in debt, and it will take them nearly 20 years to pay it off. People are spending decades paying down their student loans. This is money that people could instead be used to stimulate the economy. Instead of spending 20 years paying off student loans, a person should be able to refinance these loans and pay them off three or even five years sooner. They could then put a down payment on a house, take a vacation to Hawaii or simply buy brand name groceries without the burden of student loans hanging over their heads.
U.S. Rep. Mark Pocan has recently introduced a bill in the House of Representatives that aims to refinance student loans. Under Pocan’s proposed bill, anyone with a federal student loan would be allowed to refinance to the lowest rate possible. This is a bill that will save students, both past and present, significant amounts of money and time.
The price of a college education is continually on the rise, and it is becoming more and more difficult for students to fund their education. While allowing student loans to be refinanced would not stop the initial lump sum that a person needs to borrow in order to pay for tuition, it will shorten the length of time a person must spend repaying those student loans.
Currently, 37 million people in the U.S. have outstanding student loans, with a total debt that tops $1 trillion. Student debt is more than the $857 billion of credit card debt in America and it is growing 10 times as fast.
The problem of student debt should be the number one priority of lawmakers in the area of education. We are students; we are the future. Student loans are a worrisome anvil that hang over the heads of our most educated citizens. With no guarantee of a job after graduation, anything that can help students pay back their debt must be done.
Jared Mehre ([email protected]) is a junior majoring in political science, sociology and legal studies.