The debt of nearly 40 million people in the U.S. who took out loans to pay for their college education adds up to $1.2 billion. This significant financial burden affects the decisions made by professionals for several years after graduation.
Its sheer size places this type of debt in second place among the country’s largest, right behind mortages and just before credit card debt. It is estimated that two thirds of undergraduates end up owing over $25,000. One in every 10 owes more than $54,000, according to a report published in 2012 by the Center for American Progress.
President Barack Obama’s goal is to help these students pay their debt. That is why the Student Aid Bill of Rights was unveiled yesterday, awarding students better treatment and protection as consumers. The President divulged a memo sent to the Department of Education and other federal agencies aimed at helping borrowers make affordable monthly payments.
This means offering debtors more information, access to resources, an affordable payment plan and appropriate customer service.
Obama ‘s action will help Latino students. Many of them are the first to go to college in their family and have no help from their parents to navigate a complex funding system.
The fundamental problem with student debt can be solved by renegotiating the money already owed and lowering the cost of college education, which is constantly increasing.
Last year, Senator Elizabeth Warren (D-Mass) proposed a bill to refinance interest rates. Republicans blocked it because they considered that the measure did not reduce education costs or the amount of loans given to students.
College education, especially at for-profit institutions with mostly minority students, is a big business that feeds on the loans taken by people who have a desire to grow. Drastic changes are needed to change how student loans are viewed. They must be seen as a collective investment, not as an anchor tied to the student’s neck that represents earnings for others.