Are Changes to Student Loan Program Positive?

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BY VICTORIA CRAIG President Obama unveiled changes this week to the federal college loan program. In the d...
BY VICTORIA CRAIG President Obama unveiled changes this week to the federal college loan program. In the days following the announcement, there’s been no shortage of opinions on those changes. Fox Business explains the details of the plan. “Here are the elements: It would consolidate government loans, cut interest rates by half a percent, limit payments to ten percent of income and forgive debt after 20 years.” An editor for the Wall Street Journal argues while this plan may seem like the government is finding solutions to the rising price of college tuition -- it’s really the government creating a bigger problem for American college students. “The federal government’s role has been not in making it more affordable, but making it more expensive by decades of subsidies and it is bizarre why is this a market where prices rise not only faster than inflation but in decades even faster than health care costs?” As tuition costs continue to rise, the New York Daily News argues, the new plan would do nothing to teach young borrowers how to be responsible with their money. “This plan … simply reinforces the culture of irresponsible borrowing that led to the housing bubble. Think about it: If you can take your private loans and roll them into a public program .. .and those loans are eventually forgiven, then what's the point in responsibly paying them back?” But a writer for Think Progress says government loan subsidies are what’s enabled millions to go to college who otherwise wouldn’t or couldn’t have. “Without subsidized federal loans and grants... students would be pushed into the arms of private lenders, whose rates tend to be far more suffocating... Americans would be forced into even further debt bondage, unable to make ends meet and lead productive and prosperous lives under the weight of student loan debt.” Finally, a writer at Policy Mic says at the very least, this plan helps generate conversation about the costs of higher education. “Many have called the student loan crisis the next bubble that is waiting to burst. Obama and education leaders should seize this opportunity to engage in a national debate about secondary education before this particular bubble pops.” Transcript by Newsy.