A New York congressman from the Hudson Valley recently held a telephone town hall on what he calls the ongoing student debt crisis.
With federal student loan debt surpassing more than $1.2 trillion, Democratic Congressman Sean Patrick Maloney held the telephone town hall for constituents of his 18th congressional district.
“Even after accounting for inflation, the cost of tuition has tripled from the 1970s to now,” Maloney says. “And across the country, 71 percent of those earning a bachelor’s degree graduate with debt, averaging almost $30,000, a massive weight on the lives of millions of young Americans. Twenty years ago, fewer than half of college students graduated with debt, and the amount was less than $10,000 on average. So it’s going the wrong way.”
Callers expressed two major concerns – high interest rates on student loans and the overall cost of a college education. Wendy from Fishkill says her son is carrying a student loan with a 7.9 percent interest rate after having attended Dutchess Community College.
“We did the right thing; we sent them to Dutchess the first two years which was easy, it’s doable. We love Dutchess,” Wendy says. “All our boys are doing that unless they get big scholarships. We have three kids we’re putting through college.”
“Wow,” says Maloney.
“Our oldest son is done, but we have this 7.9 [percent] interest loan hanging over our head,” Wendy adds.
“Yeah, that’s crazy,” says Maloney.
“Yeah, it is crazy, it’s absurd it’s inappropriate.”
“If you don’t mind me asking…” says Maloney.
“Yes, go ahead,” Wendy says.
“I don’t know if you heard the answer I gave. I have a piece of legislation that I’m a sponsor of that would allow you to refinance that,“ Maloney replies.
“Thank you,” Wendy says.
“I just think you shouldn’t have to pay, nobody should be paying 7.9 [percent] or whatever you said right now in the current market when we’re giving it away to the big banks for 1 percent, and 3.8 [percent] is a market rate. So I think that’s where we start.”
Maloney is a co-sponsor of the Federal Student Loan Refinancing Act. Democrat Kirstin Gillibrand has introduced a related bill in the Senate. The bill would allow borrowers who received certain loans on or after July 1, 2006, to consolidate those loans as Federal Direct Consolidation Loans. Maloney also is a co-sponsor of the Bank on Students Emergency Loan Refinancing Act. Massachusetts Democrat Elizabeth Warren introduced a companion bill in the Senate, where it failed in June. The bill would allow borrowers to refinance and consolidate public and private loans under the Bipartisan Student Loan Certainty Act, with an interest rate of about 3.8%.
Another caller, Barbara, says her son also went to Dutchess Community College for two years, worked for three years, than attended what she calls a prestigious, i.e., expensive, college, and racked up an enormous amount of debt. He graduated in 2008 and lost his job as an architect when the housing market crashed.
“He did not need us, his parents, to sign or anything. He did it all on his own so the debt, I’m not responsible in any way for the debt. It’s all on his shoulder,” says Barbara. “And it’s emotionally taken a great toll on him and my family because he can’t pay it. He hasn’t been paying it. He’s defaulted on it. That’s not how we raised our children. And I think you can hear the emotion in my voice.”
“No, it’s hard. I get you, I hear you. Can I ask you a couple of questions?” Maloney asks.
“Sure,” Barbara responds.
“Do you know how much debt does he have?” Maloney inquired.
“Over $100,000,” Barbara answers.
Maloney then asked about the interest rate and Barbara responded that it is 11 percent for some of the loan.
“It’s like he bought a house already and he’s got a mortgage except he’s got no place to live, right?” says Maloney. “And the thing that I worry about is that kids are going to start thinking it doesn’t make sense to go to college. They’re going to start thinking, like why would I take all that debt…”
“And I got to tell you, I have another son who did not go to college. He works with one of the utilities in the state and he’s doing fantastic,” says Barbara. “And now, and this other boy looks at his brother and says, my god, I worked so hard for five, six, seven years he went to school, and he has nothing to show for it.”
Meanwhile, the White House Domestic Policy Council and the Council of Economic Advisers recently issued a report on college affordability. The report is entitled “Taking Action: Higher Education and Student Debt.” The report includes new information on how borrowers are affected in each state.
