As candidates race to charm young voters before the national elections in November, both GOP frontrunner Mitt Romney and President Barack Obama have expressed their commitment to reducing student loan debt.
Obama and Romney are lobbying Congress to freeze student loan interest rates at the current rate of 3.4 percent at a cost of $6 billion for one year. If no legislative action is taken before July 1, the College Cost Reduction and Access Act would expire and rates would automatically double.
The issue is not far removed from USF, where students are borrowing money with increasing skepticism, USF Director of Financial Aid Billie Jo Hamilton said.
I do think there is an increased awareness and cautiousness about borrowing more than has been historically the case, she said. The state of the economy and the job market certainly influence those types of decisions, as well. Students are more informed borrowers, and hopefully are acquiring a reasonable amount of debt in order to get their degree.
Sitting aboard Air Force One on a conference call with college journalists Tuesday, Obama asked students to tweet with the Twitter hashtag #DontDoubleMyRate and to lobby Congress to freeze the interest rate increases.
I know what this is like, he said. When Michelle and I graduated from college and law school we had enormous debt, which took us a lot of years to pay off, which is probably why, I think, I take this issue so personally. For a lot of families, the idea of owing that much is simply out of reach for their children. In America, higher education cant be a luxury. Its an economic imperative that every family has got to be able to afford.
Cecilia Munoz, assistant to the president and director of the White House Domestic Policy Council, said the administration would continue working with state
governments to emphasize reducing tuition costs, and Obama met with all governors in February.
The president spent a lot of time with them discussing this issue and pressing them very hard on (not) cutting budgets for higher education and on the economic necessity to make sure the federal government, state government and colleges themselves are working together to bring costs down, she said. Were using our power as the bully pulpit and our relationships with states to make sure were driving costs down.
Last week, USF received a $37 million budget cut and requested for a 15 percent tuition increase for the next fiscal year. Though Florida, which as a whole received a $300 million cut to the State University System last week, remains ranked 45th in terms of tuition costs, costs have been on the rise as the state has continued to cut funding.
In 2007, the state provided USF with $250.6 million in funding, and tuition brought in $97.3 million. For the 2012-13, fiscal year, the state is projected to provide $145 million and tuition is projected to provide $146.6 million.
Yet as tuition costs have climbed, so have student loan rates. Though the rate of borrowing has flattened in recent years, increasing only 2 percent between 2009 and 2010, Hamilton said the volume of student loans has increased by 50 percent since 2007-08.
Munoz said reducing costs of tuition will help create more college graduates, which, in turn, will grow the economy.
But an analysis of government data released April 23 stated that one in two college graduates were unemployed or underemployed. Obama said the unemployment rate for Americans with college degrees is about half the national average.
Hamilton said the political limelight brought to the topic is welcomed.
Student debt is part of a bigger conversation on how we finance higher education in the United States, she said. Part of the reason for the concerns over student loan debt is that the purchasing power of the Pell Grant program has not kept pace with the costs of higher education, resulting in increased need for student loans. Hopefully, with attention from both parties, a better solution for students will emerge.