By Shawn Gross, ’12
Many of the issues about higher education have to do with the younger generation’s belief that college should be a right and not a privilege. Federal and State governments pay for K-12 education because it gives access to the individual to function in society. If you miss a certain amount of days, a truant officer will fine your parents. The United States Department of Labor determined that 68.1 percent of college seniors in 2010 went on to attend colleges or universities, a drop from the previous year. Yet, the national economy needs more skilled and educated workers to stimulate job growth in America. Isn’t that a marker of a functioning society? While we pressure students to do better on standardized tests so that they can go to college, colleges are raising tuition rates to eye watering levels.
Thankfully President Obama promoted his new student loan program last week at Colorado University in Denver. The “Pay As You Earn” (PAYE) plan is an executive order that will reduce the amount students pay on their loans each month after they graduate. It will also reduce the interest amounts on loans by consolidating them into one lump, making it easier for students to stay on time with payments. This plan will have a positive impact on students at Pacific Lutheran University and across the nation.
Many students at private colleges rely on government issued loans to subsidize the costs of tuition. Ninety-five percent of students at PLU have taken out loans according to PLU’s website. Nationally, borrowers only make up about two-thirds of all college students. Private and colleges like PLU serve about 10 percent of all higher education students. Surprisingly, students attending private colleges are responsible for thirty-three percent of all federal student loan defaults. Student loans are a lifetime obligation until they are paid off. Graduating students can join the peace corp. or teach in underprivileged neighborhoods for a percentage reduction. You cannot just walk away. To default on a loan means that your credit score is hindered and first and third party collection agencies can jack up interest rates on those loans. This Presidential action plan is enacted; those desperate students will be more capable of handling their enormous loan debt.
Daniel Bacon the alumni coordinator at Peace Community Center works closely with high school students trying to go to college. In order to find a best fit, usually the least debt heavy college for high school seniors, Bacon files through several financial aid award letters from various colleges. This past year two of the seven students that went through the organization and into college are now at PLU.
“You see a lot of public colleges raising tuition rates. This trend is hurting the kids and definitely makes private school more realistic. Obama’s plan will help students who want to go to any college in Washington,” Daniel said when asked why these students went to PLU.
Deciphering student loan packages requires a legal and economics degree at the highest level. So students at PLU have a hard time understanding their financial aid packages. Like most private colleges, PLU offers students hefty financial aid packages that include scholarships and grants (free money), and loans (cash that is legally obligated to be paid back six months post-graduation). Many of the students that receive large scholarships accept their complete award packages without considering the affects that loans will have on their actual cost of attendance.
A separate piece of Obamas’ executive order is a form that will aid perspective students by clarifying the actual cost of attendance once they receive their financial aid packages. Many students with parents that did not attend college do not understand how loans work. As soon as a student dependent on loans attends college, interest rates on those loans begin to accrue. This increase in actual cost of the loan continues the whole life of the loan, but students do not have to pay until six months post-graduation. While the form that the Obama administration will provide to families is still in the works, and looking for input, the basic layout will be an easy read college cost calculator.
As a Fulbright scholar, Paige Griffith has her tuition paid for, but with 10,000 in loans she has a vested interest in her financial security.
“I am very satisfied with my award package, but I still have a personal interest in my financial aid situation. You have to take it upon yourself in order to understand financial aid options. The financial aid counselors (located down the hall form the financial aid office) will go through options, describe interest rates for different loans, and make suggestions.” -Paige Griffith
Federal financial aid was established to support students who want to go to college. The PAYE plan tells students that the government will work with them to help ease student loan obligations. Most students who attend PLU are already satisfied with the financial aid packages they receive. At PLU the implementation of this plan will invite a host of new students who seek a liberal arts education, but might have reservations about the number attached to the bill.
Categories: Student Life