College loans come back to haunt

-A A +A
By Hal Rhodes

For several years now, I have served on a scholarship selection committee at the University of New Mexico for graduate students on such career paths as college teaching, law, public administration and the Foreign Service.
It has been a rewarding, if sometimes frustrating experience — so many qualified students with meritorious goals in competition for limited financial assistance, lots of need without the wherewith to help them all. Still, I and others on the committee could take some comfort in knowing that other resources were often available to students we were unable to help.
In New Mexico, there are at least a handful of other privately funded scholarship and fellowship programs. There are also the quasi-publicly funded lottery scholarships at each of the state’s universities, although that program itself has now made the needy list. And then there always college loans to which students may turn when all else fails.
Unfortunately, all else fails all too often for all too many these days.
As the Project on Student Debt, an initiative of the Institute for College Access and Success, recently noted, “Seven in 10 college seniors (71 percent) who graduated last year had student loan debt, with an average of $29,400 per borrower.”
For students with advanced degrees, including medicine, engineering and science, the debt can reach into the hundreds of thousands of dollars.
Between 2008 to 2013, student loan debt “increased an average of 6 percent a year.” Small wonder student loan debt in this country now exceeds the total combined credit card debt of all Americans.
Our country’s future depends on a well-educated citizenry but that future is surely imperiled by the way we have gone about financing a college education.
Every aspect of economic growth — from home ownership to automobile and durable goods — is chilled precisely because so many graduating students are burdened by debt payments on loans they acquired while getting their education.
In New Mexico fully 61 percent of college graduates are encumbered with student loan debt averaging out at approximately $18,000.
That’s an average, mind you. Some graduates are deeper in debt than that, some are not. But it is a mighty load to carry for folks just out of college and beginning a life and careers.
Last week, Massachusetts Sen. Elizabeth Warren, a Democrat, was joined by 22 other U.S. senators in introducing legislation that might help those faced with repaying their college loans.
Called “The Bank on Students Emergency Loan Refinancing Act,” New Mexico Democratic Sen. Tom Udall is a co-sponsor of the bill.
Says Udall, “when a student leaves school with so much debt, they struggle to pay the bills, and they’re barely able to make ends meet, the system is broken.”
The legislation in question is the product of plain old common sense.
Many students and former students find themselves grappling with college loans that were taken when interest rates were higher than they are today. Under the proposed law, borrowers would be able to refinance those loans at the rate now being offered to new borrowers, thereby reducing their loan burden.
Of course, the costs of those student loans could be (and arguably should be) much less if tuition at our universities was not so steep. Estimates are that tuition, adjusted for inflation, at U.S. public colleges and universities has tripled over the past 35 years.
And Benjamin Ginsberg, writing in the Washington Monthly a couple of years ago, calculated that between 1947 and 1995 instructional spending at American universities jumped by 128 percent, whereas the costs of administration escalated by 235 percent.
Perhaps someone should fashion legislation to curb bureaucratic excess in the Halls of Ivy.