May 4, 2012
OPINION: Keep down the rates of student loans
Education is the key to success—a “silver bullet” for changing lives in all segments of society. An affordable, quality college education must be available to all, not just the wealthy.
Horace Mann, the renowned innovator in public education, said that “Education … beyond all other devices of human origin is the great equalizer of the conditions of men, the balance-wheel of the social machinery.”
This is why, as educators, we must do all we can to convince lawmakers in Washington that they must not allow the interest rate on millions of so-called Stafford loans to double from 3.4 percent to 6.8 percent. That will happen automatically on July 1 if Congress fails to act. It would affect 7 million students nationwide—400,000 in New York alone—and raise costs by an average of $1,000 each, the White House says. Doubling loan rates would cost New York students and their families an estimated $419.7 million.
Student loan debt is among the vital issues facing young Americans today. It has reached more than $1 trillion—higher than the debt on credit cards and car loans. The average balance nationally is about $23,000.
President Obama is urging Congress to keep the interest rates low; his presumptive Republican challenger, Mitt Romney, agrees. The political fight in Congress seems to be over how to pay for it.
This crushing debt comes on top of tuition increases. Tuition and related expenses increased 400 percent in the 30 years between 1980 and 2010, while median family income rose just 150 percent in the same period.
As a college president, I know firsthand how important it is that something be worked out. We must educate our young people in order to have a productive workforce. Hampering higher education will ultimately lead to the decline of America as a world power. We cannot survive as a nation in the global marketplace without student loans at a reasonable rate.
A recent CBS/New York Times poll found that two-thirds of Americans feel there is too much disparity between the haves and have-nots in our country. In considering ways to narrow the income gap, one constant factor is the strong relationship between education and lifetime income.
The U.S. Bureau of Labor Statistics says that median weekly earnings for college graduates for the third quarter of 2011 was $1,152 per week, compared to $636 for high school graduates and $459 for those without a high school diploma. So one of the most important goals of higher education ought to be to provide our young people with a high-quality education based on merit rather than means.
Increasing the interest rate on student loans will only serve to make it more difficult for low- and middle-income students to receive a high-quality education that will ensure upward mobility.
It is the responsibility of those in leadership positions to help provide access to a good education for all sectors of our nation. We must help nurture the next generation of entrepreneurs, thinkers, innovators and business leaders who one day will make their mark in the global marketplace and fortify our country’s status as a world power.
Making college affordable is one way to do this. Holding down the interest rate on student loans is another.
Dr. Alan Kadish is the president and CEO of Touro College and University System.