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Wednesday, June 11, 2014

Student loan cap ignores larger issue

Telegraph Editorial

President Barack Obama believes the choice is clear when it comes to higher education.

“Protect young people from crushing debt, or protect tax breaks for millionaires,” the president said in his weekly radio address last Saturday. ...

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President Barack Obama believes the choice is clear when it comes to higher education.

“Protect young people from crushing debt, or protect tax breaks for millionaires,” the president said in his weekly radio address last Saturday.

Nobody knows the burden of student debt better than college students from New Hampshire.

The Institute for College Access and Success found that 78 percent of the students who graduated from a college in the Granite State in 2012 exited the stage carrying not only a degree, but $32,698 in debt.

That’s a heavy burden for young people hoping to parlay an education into a career.

To help ease that crush, the president in 2010 signed an order that capped repayments on student debt at 10 percent of a person’s monthly income. That only covered federal loans made after 2007, so any loans issued earlier than that might have carried loan-shark-like interest rates for an estimated 5 million people. Then, on Monday, the president extended that cap to loans issued before 2007.

He also threw his support behind a bill in the Senate sponsored by Sen. Elizabeth Warren, D-Mass., that would allow as many as 25 million people to refinance their loans. That initiative would be paid for by a tax on the wealthy, making it anathema to most Senate Republicans.

We are generally in favor of anything that creates an easier pathway to college – especially for those born without silver spoons in their mouths and a guaranteed spot in one of the nation’s elite prep schools. We also recognize that reducing the burden on newly minted college graduates carries some benefits for the economy as a whole. The less money that goes to pay off student loans, the more that can be used to buy things like houses and cars and raise families.

Putting a cap on a graduate’s monthly student loan payment offers some relief but does nothing to address the cost of higher education, which is at the root of the problem and contributes directly to the student debt load.

Some of those millionaires Mr. Obama referred to in his radio address? They might be college presidents, chancellors and others beneficiaries of a higher education system that is as broken as the political process itself.

In fact, as much as people like to complain about the rising cost of health care, Bloomberg News says that sector has only increased about 600 percent since 1978; the cost of higher education during that same period has risen by 1,120 percent.

It’s more evidence that keeping college costs down to begin with is better than trying to put a Band-Aid on skyrocketing debt amounts, which is now more than $1.2 trillion and exceeds all the country’s credit card debt combined.

We’ve created a higher education culture that treats college administrators like royalty.

New Hampshire is hardly an exception.

Take UNH President Mark Huddleston, an affable gentleman who represents the state and his institution with dignity. He earns more than $300,000 a year, lives for free in college housing, has a generous pension funded by taxpayers and gets a membership to a “social club” paid for by the university.

If that sounds a bit extravagant, that’s only when compared to the lifestyle of those who lose sleep at night trying to figure out how to send their children to his college. It’s not only not out of line for university presidents, it’s not even on the high side, and that’s part of the larger problem.

We don’t quarrel with those who say student debt is harming our economy. But those same people also should recognize that the steep cost of college itself is doing much the same thing by putting higher education out of the reach of many – especially those who were not to the manor born.