Gone are the days when it was easy to work one’s way through college. In recent years public college funds have been cut drastically with loans filling the gap. There is currently $1.2 trillion in outstanding student debt in the United States, second only to mortgage debt.
With control of the Senate hanging in the balance, Democrats are seeking to capitalize on the issue by making student loan reform a central campaign theme in the upcoming midterm elections.
According to a report released earlier this year by the New America Foundation, the average student receiving a bachelor’s now graduates with $29,400 in debt.
With costs rising, tuition rose 19 percent from 2004 to 2012. Combined with the poor job market created by the Great Recession, this spells potentially dire consequences for the rising generation.
In Virginia, Senator Mark Warner (D) has made student loan reform a major issue of his re-election campaign, highlighting his efforts on the Senate Finance Committee championing reform.
With Senators John Thune (R-S.D.) and Kelly Ayotte (R-N.H.) Warner is sponsoring the Employer Participation in Refinancing Act which allows businesses to provide a $5,000 pre-tax benefit to their employees to assist in directly paying down their college loans. In order to qualify, employees must refinance their loans in the private market.
“It’s a simple, common sense, bipartisan idea that everyone should get a fair shot,” said a spokesman for the Warner campaign.
In 2013, students borrowed $117 billion in student loans made available by the Department of Education. The Department of Education is the largest provider of student loans followed by colleges, charitable organizations, and banks.
With Senator Marco Rubio (R-Fla.), Warner introduced the Dynamic Student Loan Repayment Act of 2014 which would make it easier for borrowers to repay loans according to their level of income.
“It’s something that gives students and graduates a few more tools towards paying down the debt and making life easier,” said a Warner spokesman regarding the bill.
Jenna Friedberg, 19, a sophomore at George Washington University is hoping to go to law school and to use her degree working for the Anti-Defamation League fighting hate crimes against Jews.
“I’m passionate about helping innocent victims of hate crimes that happen around the country. I want to help spread knowledge around because if you get can deal with ignorant hate you can deal with other kinds of hate easier.”
Like many of her fellow college students, Jenna knows the pain of going into debt to pay for college.
“I think it’s kind of hypocritical that we tell people you need to go to college and then charge such a large sum of money. And it’s not only college that so expensive but it’s also the SAT and the ACT,” Friedberg declared.
The burden of student loans is worsened by the interest rate that accumulates. Interest rates for student loans vary. For both Direct Subsidized Loans and Direct Unsubsidized Loans the interest rate for the 2013-2014 academic year was 3.86 percent. For the current year the interest rate is 4.66 percent.
“Debt is a horrible necessity. It’s gotten to the point where my friend told me she is $90,000 in debt and doesn’t know what to do about it after college,” Friedberg said.
Tuition at George Washington University for the 2014-2015 school year is $48,850. The average financial award was $39,418 for undergraduates at GW. Ninety-five percent of applicants received aid.
“Even though it’s expensive GW is good with merit scholarships and aid. I know a lot of kids who also have financial aid. Not all schools are as good at providing financial aid,” Friedberg said.
Senator Warner, a George Washington alumnus himself has been quick to champion student debt reform remarking on a recent tour of Virginia’s colleges that had he been deeper in debt after college he would not have been able to start businesses, one of which became Nextel, a cellular phone company.
His student debt reform bills remain pending in committee. The partisan nature of Congress makes it unlikely the legislation will pass by the end of the current session of Congress in December.
However the bipartisan approach that Warner has sought on student loan reform has resonated with voters and he is likely to win in November.