Corinne Ramey

Double-Dog Sure on Student Loans

Blog Post About DMI's TheMiddleClass.org

Secretary of Education Margaret Spellings wants to make sure that every college student has access to federal student loans. "I want to make double-dog sure that we have the tools necessary [to make sure federal loans are available]," said Spellings. "If we don’t need to use them, so be it."

A bill called the "Ensuring Continued Access to Student Loans Act of 2008" seeks to do just that. The bill passed overwhelmingly in the House on April 17, but the Senate has yet to take up its version.

The Act seeks to guarantee access to student loans for students and their families in the face of the credit crunch and an unstable marketplace. It increases the amount that students can borrow in unsubsidized Stafford loans and increases the annual limits by $2,000. It also raises the aggregate ceiling (the total amount of federal student loan debt that students can accumulate to $31,000 for dependent students and $57,500 for students who are independent. The Act authorizes the Secretary of Education to use federal funds to guarantee lending agents that are designated as lenders of last resort. "I want to make double-dog sure that we have the tools necessary [to make sure federal loans are available," said Education Secretary Margaret Spellings. "If we don’t need to use them, so be it."

According to TheMiddleClass.org, this bill isn't just good for soon-to-be-poor grad students like me, it's good for the aspiring and current middle class. From TheMiddleClass.org:

"With 66% of students at four-year colleges holding student loan debt, the credit crunch has generated concerns that aspiring middle-class and middle-class college students and their parents will be unable to obtain the loans they rely on to afford college. Federally backed student loans, which are cheaper than private student loans, provide these students with a financial gateway to higher education. Increasing the amount of Stafford loans that students are able to borrow would help students cope with tuition costs that they would otherwise have to fund with more expensive private loans. The delay in PLUS loan repayment authorized by the bill, along with the exemptions for delinquency on mortgage and medical bill payment, recognize that the declining economy in general, and the collapsing housing market and rising health care costs in particular, are squeezing many middle-class American families. In conjunction with the act’s other provisions, the authorizations of funding for lenders-of-last-resort and for purchases of student loans by the government minimizes the risk that the marketplace for federally backed student loans will collapse."

The bill, however, isn't perfect. Guaranteeing access to student loans is a great idea, but an ideal policy would increase federal aid amounts, not just loans. According to Campus Progress, student debt is a serious concern for a lot of graduates, with college graduates delaying life decisions because they are buried under mounds of debt. Fourteen percent of college grads delay marriage, 38% delay buying a house, and 21% delay having kids. According to a report by U.S. PIRG, student debt becomes unmanageable for grads entering public service careers (the report specifically looks at teaching and social work), which deters graduates from entering these careers.

So, as Spellings said, being "double-dog sure" that students have access to loans is important, especially given the uncertainly of the current financial markets. But an ideal bill needs to go a lot further, to subsidized loans and grants as well.

Posted at 7:45 AM, Apr 26, 2008 in Education | TheMiddleClass.org | Permalink | Comments (2)