Students should be given more flexible terms for student loans


The Appalachian Online

Kevin Griffin

Student loans are a major cause for stress for many college students. The total student loan debt stands at more than $1.1 trillion as of March 2014, according to the New York Federal Reserve Bank.

Although the Department of Education reported in September that the default rate had fallen, it still stood at 13.7 percent for students who started repaying in 2011.

Given these numbers, the apprehension is understandable.

Yet, according to a Jan. 24 New York Times article, the student loan situation may be shifting thanks to changes made to laws over the last decade that make loan repayment potentially easier.

By virtue of these changes, students have the option of entering income-based repayment plans. These plans would cap the amount a student paid at 10 percent of monthly income, and loans would be forgiven after 20 years if the loan had not been paid off in that time. For those working in the public sector or non-profits, loans may be forgiven after a decade, according to the article.

Whenever the topic of student loans comes up, a number of moral, financial and political questions are raised. Do policies like this promote irresponsibility? Are they affordable?

The answers are complex, but a good starting point would be identifying the social investment that should be made in education. Education is a key factor for economic development and is an essential component in providing equality of opportunity. For those reasons, there should be some amount of government involvement in seeing that higher education is as easily obtainable as possible.

Another reason is more practical. Students who graduate with debt are burdened in a way that constrains spending habits and potential default could ruin the credit scores of those students. Both of these developments would be bad for the economy.

So a plan that loosens up the burden on college students would be worthwhile. I personally would not feel right not having to pay anything on my student loans, but having an option to repay them in a way which lifts off an economic burden is a definite plus.

The prospect that income-based repayment plans could make the student loan problem more manageable is a great thing, but that does not mean we should stop looking for ways to improve education costs and access.

Is it sufficient to make a few changes to the system we have now, or should we consider more radical changes that might produce an overall better result?

Answering that question is complex, but for the sake of the country’s future it is a conversation we need to be having.

Griffin, a junior journalism major from Madison, is an opinion writer.