Student loan debate gets edgier
Senate Republicans accused President Obama this week of pandering to get the youth vote this fall after he issued an executive order that aims to provide relief for millions of college graduates having trouble repaying student loans.
Reaction to the announcement during Obama's social media chat at the White House with some of those potential voters was no less blunt.
"This seems to me like an attempt to put a Band-Aid on a broken leg," a questioner identified only as Caitlin began. "What are we doing to actually lower the cost (of college), so these loans will no longer be necessary?"
The tone was light during the hour-long session, but the topic was serious. Obama responded to questions submitted via Tumblr, a social networking site popular among young adults, as part of a week-long focus on student debt. He'll wrap it all up Saturday with a commencement speech at the University of California-Irvine.
Most of the White House blitz came in advance of a Senate vote Wednesday – blocked by Republicans – that would have allowed about 25 million borrowers to refinance at a lower interest rate. Obama's order, announced Monday, aims to expand an income-based repayment plan that caps payments at 10% of a borrower's discretionary income.
Sen. Lamar Alexander, R-Tenn., called the flurry of activity a "week-long political stunt," adding that the more pressing need is for "more good jobs and better schools."
Financial aid consultant Mark Kantrowitz dismissed the squabbling as mostly political posturing before the midterm elections. But he, too, sees loan repayment as a side issue.
"The real problem is the amount of debt, not the cost of the debt," said Kantrowitz, publisher of Edvisors.com.
According to White House figures released this week, 71% of students earning a bachelor's degree graduate with debt, averaging $29,400. This year, the student loan debt balance stood at $1.1 trillion — second only to mortgages for households.
In his Tumblr talk, Obama blamed the rise on the declining support of public universities by state legislatures and hyped his push for a federal college ratings system that would identify what he called "good bargains" and "really bad deals." A draft version is likely to be made available this year.
Others point a finger at poor decisions made by colleges. A study last month by the Institute for Policy Studies, a liberal think-tank, found that student debt rises faster at state universities with the highest-paid presidents.
A documentary called Ivory Tower, which opens Friday in select cities, highlights other factors — including the seemingly non-stop construction of campus buildings.
Harvard Business School professor and author Clayton Christensen blamed the tuition spiral on what he called "cost disease." New research facilities and classrooms and luxurious dorms and recreational centers are all part of a vicious cycle as universities try to keep up with and outdo their rivals, he said.
Campus amenities such as tanning decks and gourmet food didn't come up during the Tumblr talk about college costs. Nor did they at a forum in Washington on Wednesday, when Education Department officials asked college students and recent graduates what the federal college ratings system should address.
Among the graduates' suggestions: promote community colleges as low-cost, high-quality alternatives; simplify the application process for federal student aid; and require colleges to offer better financial aid counseling.
"For me, the price tag was daunting, but I never had the option not to go to college," said Norma Orozco, a 2014 graduate of the University of California-Santa Barbara. She faces repayments for about $20,000 in loans. That's an estimate, she says — because "it's a little bit scary to look it up."