The Obama administration is committed to making higher education more affordable. As a recap, the Student Loan Reforms President Obama signed into law last week will: (1) Double funding for PEL grants, (2) Increase tax credits to $10K over 4 years, (3) Limit payment amounts to 10% of the graduate's income with the balance forgiven after 20 years, (4) Forgive student loans after 10 years for those graduates working in public service professions such as teaching and nursing, as well as those who serve in the military.
And (5), the student loan reform will also end subsidies to private lending companies. Starting this July, a federally managed student loan program will replace the $61 billion program that now subsidizes private student loans. (See Student Loan Reform Government Subsidies for Private Student Loans.) Those who have worked through the layers of private lender botchaucracy can appreciate the importance of eliminating the aggravation and waste here. Still, I'm curious to learn how this reform will help future up-and-comers unless we can reduce the cost of education overall.
A good example of this problem is the case of Josh. As did so many of the twenty or even thirty-somethings in the workforce, Josh scaled back his hours during the economic downturn and headed back to school for his masters degree. Good for Josh. It was also a very good thing that his first year was paid for in large part by scholarships. His second year was not. So Josh turned to student loans to get through.
Now, a full year after graduation . . . and after paying $220 per month in student loan payments, Josh has reduced his original loan by only $181, from $18,290 to a payoff figure of $18,109. Add to this a series of frustrating administrative hurdles that might have been intentionally designed to incur a tidy bonus income for the private lenders in late fees garnered from the less diligent debtors. And for those who believe PEL grants and student loans are easy money, education is not easy. Not when it's good. Creating more manageable loans will be a real plus.
Josh is hardly the worst example, considering that my husband's cardiologist is still paying off hefty student loans after 15 years of practice. This man saved my husband's life. He saved my aunt's life. And the advice he gave me over my aunt's could-have-been-dead body proved to be invaluable. Not only in piecing her back to health, but in ensuring she achieve and maintain a quality of life that made her life worth living. What price do you put on that?
Jill Biden says higher education is essential for our children's success. Had her video allotted more time, she might have said so much more. Education is not only important for our children's success, it's crucial for the success of the country. Education is not simply a means to an end. It is a state of being, as well as a state of knowing. Education has value for its own sake, enabling us to make knowledge based choices and judgments. It teaches us critical thinking and just as important, how to seek out facts rather than rely on hyped-up opinions. And it's never too late.
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