If nothing is done to prevent it, on July 1, student loan interest rates will double from 3.4 percent to 6.8 percent, and the Republicans in the House of Representatives are doing nothing to prevent this tragedy, not only for college students, but for the long term future of the American economy!
As it is, many college students are in a bind, unable to pay their student loans, and therefore, will lose their credit rating, and be unable to purchase homes, rent apartments, buy automobiles, plan to have children, and all of the other plans and dreams of young people, who get an education and then discover how difficult it is to gain employment in their field of study!
37 million young people have student loans, and close to 7 million are delinquent on student loans more than 90 days.
The average outstanding student debt per household was nearly $27,000 in 2010, and one in four students have a debt more than $61,000 per household, an insurmountable burden.
69 percent of student loans are paid by middle class and poor families, and 24 cents of every dollar earned in a poor household and 12 cents of every dollar earned in a middle class household goes to student debt payments. For the higher income level, only 2 cents per dollar earned goes to student debts, and only 31 percent of loans are in higher income households.
$1.1 trillion, second only to mortgage debt, is owned by students who have no hope in many cases of ever coming out from under what is a form of economic slavery!
With the Great Recession of 2008 and its aftermath, the effect has been to delay or forgo the vision of ever having a normal economic life of home, automobile, and marriage, the whole concept of the “American Dream”!
While this crisis festers, banks are able to borrow from the Federal Reserve at 0.75 percent, one eighth of what students will face after July 1, adding $2500 to their financial burden, while under a plan of Senator Elizabeth Warren of Massachusetts, students would get the same interest rate as banks, and save an average of $6500 per student.
This change in student loan interest needs to be adopted, but the GOP seems uninterested in doing anything, and lack of action will victimize millions of college students!
67 percent of Americans want the Warren plan adopted, and 83 percent want the loan rate to stay at 3.4 percent or go down to the bank rate of 0.75 percent!
Can the Republican Party for once do what is right for young people, since not all young people are born to wealthy parents? Can they show some understanding of the struggles of young people trying to get ahead and get an education, and still have a future of independence, ownership of homes and autos, ability to have children, and save for retirement?
Should student loans become a new form of economic slavery forced on us by banks which have no conscience, other than obscene profits?