By: Richard L.
It’s that time of year when most grade 12 students are filling out university applications, applying for scholarships, and inevitably looking into student loans. University education isn’t cheap; a student can easily pay upwards of $10,000 in a single year. While Canadians have been fortunate thus far in the global economic downturn that has been around since America’s last presidential election, student loans are expected to be a hot topic in 2012.
The American student loans system has come under attack. The issue of student debt has gained special prominence in the Occupy Movement of 2011, along with the income gap and corporate greed. Unemployed graduates have startling figures to support their claims: student debt as of the start of 2012 is in excess of one trillion dollars ($1,000,000,000,000), which is more than the credit card debt. To put that into perspective, this is roughly 1/15 of the national debt.
The students aren’t refusing to pay up. A 2005 change in the bankruptcy code currently prevents student debt from disappearing like other debts upon declaring bankruptcy, and many now argue that the old rules be restored.
However, the unemployment situation for students is not as bad as “[being the] highest since 1970” might imply. In September 2011, the unemployment rate for college graduates was close to 5%, about the same as the figure from the previous year. By contrast, overall unemployment has been hovering in the 9% to 10% range. Although the presidential candidates try to act on the issue of student debt, the specific policies are less obvious.
House Representative Ron Paul has perhaps been the most unforgiving of the possible Republican candidates, proposing to eliminate the national student loan system and requiring students to take responsibility for financing their education. His proposal in October 2011 was immediately attacked by the press as villainous and unsympathetic, yet in a USA Today statement issued on October 27th Paul has his own statistics: while commodity prices have double since 1980, the cost of education has quintupled. By “reigning in the government”, inflation can be brought under control, and education might become affordable again.[1]
Contestant Newt Gingrich takes a more personal approach, assuming that the student loan issue rose from the attitude of the students. Again students will be required to work for their education, but schools will provide work-study programs that will make it easier for students to find jobs. If students realize the expense of their education, they are less likely to drop out or to stay in university for more than the necessary time, which is also a major contributor to the student debt.
The Obama Administration in fall 2010 tried to deal with the issue of student debt by further limiting the size of debt repayment, a less drastic measure than the Republican response that would help graduates bear the burden of repayment.
As the American presidential elections draw closer, student debt will undoubtedly be addressed in debates and rallies by both sides, appearing for the first time alongside housing, foreign policy and medical care.
Paul, Ron. "The Truth about my Student Loan Plan." USA Today. 27 October 2011. Web. 16 January 2012.
