Keeping higher education within reach

Evidence continues to mount on how crushing levels of student loan debt are adversely affecting Americans and the U.S. economy as a whole. At nearly a trillion dollars, student loan debt is now second only to home mortgage debt, having surpassed car loans and credit card debt. For a growing number of young people, it’s squeezing out the American dream altogether. A recent report by the New York Federal Reserve Bank shows 30-year-olds who hold student debt are less inclined to take out a mortgage or a car loan than 30-year-olds with no history of student loans. This reverses a decade long trend in which student borrowers, who were typically better educated and earned higher incomes, had a higher rate of homeownership. 

 Student debt is soaring for people in all age brackets. One of the most disturbing trends is the exploding number of delinquent student loans among seniors. More than 134,000 Social Security recipients had their benefits garnished in the first three-and-a-half months of 2013 because they were unable to keep up with payments on loans acquired on their own behalf or, more likely, to benefit their children or grandchildren. The number of garnishments through mid-April of 2013 has already surpassed the total for all of 2012, and last year’s garnishments were nearly four times higher than in 2003. We bail out banks deemed too big to fail, but current regulations permit only $750 in monthly Social Security benefits to be protected from such garnishments, penalizing those who already receive a living allowance well below the poverty line. We ought to be ashamed.

 Americans are taking on this staggering debt for a reason. Individuals who lack a post-high-school education face lifelong income disparities and a widening gap in employment opportunities. Our nation’s ability to compete in the 21st century global marketplace is inextricably linked to developing a highly skilled workforce. Education remains the great equalizer, the surest path for low-income students to escape poverty. Our goal as a nation must be to advance policies that help to make college affordable and keep higher education within reach for all Americans, regardless of income status. 

 Recent regulatory changes in PLUS loans, loans taken out by parents and grandparents, tighten eligibility for individuals with an adverse credit history, which is defined as any debt within the past five years that has been overdue by 90 days or more. On the surface, this sounds like a helpful strategy to prevent someone from borrowing more than he or she can repay. However, it fails to take into account the possibility that circumstances that led to a past debt being in arrears may have no bearing on that person’s current or future ability to repay. 

 Over the past five months, the Congressional Black Caucus has engaged with the Department of Education regarding the change in eligibility requirements for PLUS loans. These meetings have resulted in several developments, including an agreement by the department to “grandfather” borrowers who recently had PLUS loans. Also, the Department of Education agreed to modify the denial letter to notify borrowers of their options to appeal or use other federal financial assistance.

 College loans must remain affordable if we want to truly ensure that our colleges and universities are open to students from all segments of our country. I fully support the initiatives President Obama outlined in his budget to increase the maximum Pell Grant and funding for on-the-job training programs at community colleges. We also must address the pending increase in interest rates on subsidized loans to low-income students, set to double on July 1 to 6.8 percent. If this sounds like déjà vu, it is. Congress authorized a one-year fix in 2012, and we are now approaching the same crisis again. We need a long-range solution to give students and their families the certainty they need when taking out loans. 

 I understand there might be no easy solutions, but the stakes are too high to do nothing. America needs future generations of innovators, entrepreneurs, teachers and highly skilled workers. We cannot afford to shut out millions of American students from higher education because we failed to adopt the policies and legislation that keep it within reach. We must act now. 

Fudge represents the 11th congressional district of Ohio. She currently chairs the Congressional Black Caucus and serves on the House Education and the Workforce and Agriculture committees.