PG Sittenfeld’s Proposal to Reduce Student Loan Debt
“At the heart of the American Dream is the promise of a good education, the key to opportunity for this generation and the next. Washington is letting down our students and graduates, and it’s going to take new leaders with bold ideas to fix the problem.”
- PG Sittenfeld
The Need for Affordable College Education
A college education is vital for many Americans as they look to achieve their dreams and compete in the global economy of the future. Unfortunately, the astronomical cost of higher education today, and the mountain of student loan debt our students take on to cover the costs, means that our students must spend years paying back that dream. With interest rates on student loans at unmanageably high levels, recent graduates must choose between investing in their communities or making the rent. This debt is holding back these graduates from reaching their potential, and it is holding back our country’s economic recovery.
The federal government controls many of these loans, and it’s past time that the government’s actions reflect the values of the people it represents and support students looking to continue their education. There is no excuse for the federal government to allow students to drown in debt. The college class of 2014 graduated with an average of $33,000 in student loans – the highest ever. Student loan debt is one of the most expensive liabilities held by Americans – now estimated at $1.2 trillion.
The good news is there are common sense steps we can take to solve this problem. Lowering interest rates for students will result in savings of billions of dollars, making it easier for recent graduates to pay back their student loan debt, giving them the flexibility to make a down payment on their first home, and reinvest those savings in the economy.
The “Everyone Deserves a Shot” Initiative
PG believes that it is necessary to take bold action to broaden access to higher education for young Americans. This student loan debt proposal, as part of a series of educational policy proposals called the “Everyone Deserves a Shot” Initiative, will strengthen the middle class and make college more affordable by slashing interest rates on federally backed student loans by as much as 71% and providing student loan forgiveness to low-income students upon completion of their degree. This would translate to savings of billions of dollars for current holders of student loan debt.
This proposal contains two primary elements: (1) reducing interest rates on existing federal student loan debt and (2) forgiving one year of student loan debt for Pell Grant recipients upon completion of a four-year degree at a public institution.
- Reducing Interest Rates on Existing Student Loans
By reducing interest rates on existing student loan debt for students who received federal loans in the past five years, we will substantially reduce the crushing burden of student loan debt for recent graduates who emerged from college in the Great Recession. PG proposes to:
- Reduce interest rates to 2% for all recipients of subsidized federal loans who graduated with a four-year college degree since 2009.
- Reduce interest rates to 3% for other federal loan recipients who graduated with a four-year college degree from public institutions since 2009.
This proposal will reduce the burden for more than nine million students who have graduated from public, four-year colleges across the country since 2009. Almost seven in ten of Ohio’s 2013 college graduates left school with student loan debt, averaging over $29,000 per student, and the vast majority of those students graduated from public institutions with federal loans. This proposal will allow them to refinance their student loan debt with lower, more manageable interest rates and put money directly back in their pockets.
- Forgiving One Year of Federal Loans for Pell Grant Recipients upon Completion of a Four-Year Degree at a Public Institution
This initiative will provide one year, up to $12,500, of federal student loan forgiveness to Pell Grant recipients upon their completion of a four-year degree, improving affordability of higher education and increasing retention rates and completion rates among low-income students, many of whom are students of color.
Enacting this proposal would mean that more low-income students will graduate into higher paying jobs with less debt and with up to $12,500 more in their pockets. Graduates who received Pell Grants, most of whom had annual family incomes under $30,000, are much more likely to take out federal student loans to help pay for school. Among 2012 graduates who ever received a Pell Grant, 88% had student loan debt, with an average of $31,200 per borrower. This proposal would bring down post-college student loan debt burdens for these hardworking students from low-income homes who graduated with four-year degrees from public institutions.
These are the steps our federal government should take to make college more affordable for students and former students who carry student loan debt. This proposal is consistent with our values, promotes more affordable higher education, and will help build our 21st century workforce and economy.
READ THE FULL PROPOSAL HERE.