Of all of the reasons why students should pay close attention to what’s going on in politics, student loans may be the most relevant and important. According to the Huffington Post, the average student graduating in 2010 did so with $25,250 in debt, and these amounts increase by about 5 percent each year. According to the Boston Globe, before 2010, student loans worked like this: The government supported banks which loaned out money to students while the government regulated the amounts that each student could borrow.
When the students paid the money back, the banks kept the money plus the interest gathered. If the student didn’t pay the money back, the federal government reimbursed the funds anyway so that the banks would never lose money, only have the opportunity to gain it. Sweet deal for the banks, huh? Fortunately, student loans now work like this: the government still regulates loan amounts, but money is loaned directly to the student with no bank involvement. If the student wants more than the regulated amount, they’ll have to go to an outside lender, many of which have higher interest rates, as they did in the old system. According to The Boston Globe, this system will save more than $60 million in the next decade, much of which is planned to help provide more Pell grant money. Better for us taxpayers, don’t you think?
Here’s where politics comes in. The 2010 plan was signed in by President Barack Obama. The plan that Mitt Romney, the Republican candidate for president, is proposing sounds eerily similar to the plan in place before 2010.
So, as voters, do we want to place into office the man who wants to give banks free money while our debt rises, or do we want to keep the man who wants to make college more affordable for us? While considering your choices, you may want to keep in mind that at a campaign stop earlier this year, Romney urged listeners not to “expect the government to forgive the debt that [we] take on” (Politico).