The Norman Transcript

August 26, 2013

Loan plan needs work


The Norman Transcript

NORMAN — College students and their families should be grateful President Obama elevated an issue that’s pressing pocketbooks across the country into the national discourse. College, whether a two-year or four-year school, is a necessity that is increasingly priced as a luxury, leaving graduates to pay down a mountain of debt just as they take their fist steps into independence and adulthood.

A few statistics: The average four-year college graduate leaves school with $26,000 in debt. The cost of college has risen 250 percent over the last three decades, but the median income has only risen by about 15 percent, making the idea of starting a college fund with a few dollars a week stashed in a piggy bank in a child’s infancy impossible.

And while we’re heartened the president addressed this important issue, some of his proposals miss the mark.

His broadest reform proposal includes instituting new college evaluations conducted by the federal Department of Education. We agree students and parents need a more comprehensive, understandable rubric by which to evaluate schools. As is the case with most education reforms, however, the devil is in the details. Grading colleges’ performance relative to cost and graduates’ success in finding a job is important, but it isn’t the only defining factor in what makes a school the right choice. Most universities specialize in certain fields of study and that can distort the picture.

Take the president’s host, the University at Buffalo, as an example: A student seeking to study medicine or biology would weigh the university more favorably than other schools that don’t have the same renown in that field. A simple analysis of the generic UB student’s post-graduate success, irrespective of discipline, diminishes the school’s appearance and might prompt prospective students to look elsewhere.

Given this reality, tying college evaluations to federal funding — as the president seeks — is a risky proposition. We would much prefer to treat the evaluations as a useful advisory tool for students.

A second proposal is capping a graduate’s student loan payment to 10 percent of their income. That sounds like a reasonable idea, but it could be tweaked. Many graduates say they need immediate help with student loan payments. Extending the grace period for starting repayment from six months after graduation to 12 would be an excellent start. Given the persistently high unemployment rate among young people, an extra six months to find a job and establish themselves as economically independent adults would make a huge difference.

And the loan payment cap should be more flexible. Including a sunset provision of seven to 10 years, for example, would be an incentive for students to pay off their loans quicker. Offering graduates a lifetime cap on their maximum payment sets the bar too low and could extend the life of the loan, leading to more interest paid over time.

Policy differences aside, we salute the president for addressing the topic and hope lawmakers in Washington take heed — higher education reform is critical.

— The Tonawanda News