By Alison Bergblom Johnsonemail@example.com
Rep. Keith Ellison, along with the the Congressional Progressive Caucus he co-chairs, has proposed a plan that will allow all students to finish college debt free. The congressman is co-chair of the caucus.
Ellison said that economically disadvantaged students bear the greatest student-debt burden. “Students at the bottom 25 percent of households hold 60 percent of student debt,” he said. “The average working class student are the ones who owe the money and they’re the ones we’re trying to help.”
Unlike President Obama’s proposal for free community college all students eligible for financial aid would be able to benefit from this plan regardless of age. The debt-free college plans calls for buying down tuition, increased Pell grants and ideas from states and colleges to find ways for students to graduate college debt free.
The congressman said that under the plan students who could afford to would still be required to pay tuition.
Ellison is concerned that after college people are delaying going to graduate school, getting married, having children and buying houses. The high cost of student loan debt is “ruining consumer confidence,” Ellison said.
MCTC student, Sam Pinilla, said of his federal student loans: “It’s enough to make me think about it regularly.” Pinilla plans to transfer to study for a BA in psychology. “I have two years more to get my four-year plan. There’s only more [debt] to come.”
Pinilla is already thinking about how his debt may affect his future. “I think it will have to be something I consider in any financial endeavor I take in the next 10 years, 20 years after school. Especially if I want to go into a masters program or any higher education.
Another MCTC student, Carissa Simons, does not have student debt. “I go here to community college and classes are really cheap. My twin sister goes to Seattle Pacific University out in Washington, which is a four-year private so she does take out a lot of loans. I see a lot of differences in our campuses. I visited her last May. The campus’ food, all the dorm life and the opportunities there are different. But at the same time we still get a valuable education.”
Simons hopes she will have more freedom in her choices after college because of not having debt.
Student loan servicers, such as Great Lakes, do not own student loans nor profit from their interest. Banks and the federal government own and profit from student loans. While there are repayment options for borrowers who can’t pay Great Lakes’ website says “Yes, you’re still required to pay back your loans.” In fact, Rep. Ellison asked “Why is student debt not dischargeable in bankruptcy?”
Ellison believes students don’t realize the extent to which banks and the federal government are profiting from student loans. He said banks are “borrowing money for free, then charging 6 percent. That is so wrong; but students don’t know about it.” According to the Congressional Budget Office, the federal government expects to earn $149 billion in profits off of student loans over the next 10 years.
However, Jordan Weissman, of the online publication Slate, noted that after including expenses and costs associated with administering the loans approximately three-quarters of the $127 billion profits was made off of graduate student loans.
In addition to those who may put off large decisions because of student loans, many have difficulty paying back student loans. The loan default rate for MCTC for 2011, the most recent year for which statistics are available, was 21 percent. Saint Paul College, also a community college, had a higher rate of 27.4 percent. However, Metropolitan State University’s default rate was 6.6 percent and the University of Minnesota – Twin Cities was 3.6 percent.
This legislation currently is supported by the Congressional Progressive Caucus. The Washington Post suggested that the proposed legislation was intended to pressure presidential candidate Hillary Clinton to adopt the proposal in her platform. However, Ellison said “If you don’t stake out an idea and fight for it, would it ever become likely to pass?”
He went on to list policies that he labeled as once thought “ridiculous,” including the Civil Rights Act that passed relatively quickly once there was an overwhelming movement in favor of them. “We’re trying to get students to get excited for this. As opposed to forking it over to some lender for 12 – 14 years after they get out of school,” he said.
Clarification: The photo features Rep. Ellison speaking at an unrelated AME event.