student debt

Money in Politics Fuels Student Loan Debt

Wall Street has found another way to make money at the expense of our future: student loan debt. The amount of debt held by recent graduates increased an astonishing 20 percent from 2011 to 2013, reaching a total of more than $1.2 trillion. Meanwhile, big banks and financial institutions that profit from student loan debt are spending more than ever to influence political elections and to prevent policy solutions from being are enacted. Wall Street companies rake in an estimated $45 billion off higher education each year, with a significant portion derived from student loans.

One measure to deal with the student loan crises, proposed by Sen. Elizabeth Warren, would allow over 25 million students to refinance their loans at a better rate. Senator Warren’s bill has stalled, along with similar proposals, due to gridlock and obstructionism fueled by special interest spending. According to the Center for Responsive Politics, between 2008 and 2012 the amount of money Wall Street institutions funneled into Congress through political donations nearly doubled, from $55.9 million to over $108 million. That’s a direct result of the 2010 Citizens United Supreme Court decision, which lifted restrictions on corporate spending to influence elections. 

The overwhelming increase in outside political spending is taking a toll on young Americans, as the weight of their debt limits their options post-graduation. Recent graduates are already faced with a daunting reality — with more than half of them currently unemployed — while the job market is flooded with people who have years of experience. If young Americans are fed up with special interest money robbing them of opportunity, their frustration can best be directed toward passing campaign finance reform… and supporting the Democracy for All Amendment.

This proposed amendment, which is being debated and voted on in the Senate this week, would allow Congress to regulate of the out-of-control spending in political elections. It currently has the support of 50 senators.  While not sufficient to secure the 2/3 of the Senate needed for passage, this weeks’ vote on  the Democracy for All Amendment is a historic  step towards passing the 28th amendment, and a major milestone in the fight to for better federal policies regarding student debt.

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Student Debt Day 2013 Makes Noise for Struggling Students and Families

On June 5th, hundreds of students made their way to Capitol Hill to express their concerns and tell their personal stories about rising student debt. We wanted to bring attention to the federal student loan interest rate that is set to expire on July 1st.  After meeting with and leaving information for over 120 Senate and House members, student advocates from affiliate Young People For, Campus Progress, and other youth organizations hope to have left an impact on the senators considering various plans to address the impending increase. 

Students roaming the halls of the Senate and House offices were passionate and excited about their movement.  In meetings with offices including Barbara Boxer’s (D-CA), students were encouraged to continue making noise about this issue, as public attention is a key factor in forcing a bipartisan solution.  We were told that the public attention brought to the issue by President Obama’s campaign and 2012 State of the Union address was a key factor in passing the one year freeze that was enacted last summer.  Although the president spoke to a group of students on Friday about the interest rates, the public attention to the matter is smaller than it was last year. 

But student debt remains a pressing issue.  The average college student graduates with roughly $26,000 in student debt, and doubling the interest rate would result in what the president referred to as a $1,000 tax hike each year for students.  Over the course of four years, that’s $4,000 in addition to the initial loan amount.  That is $4,000 that is not going towards stimulating the economy, preventing graduates from buying cars and houses, and forcing them to put off big decisions like moving out of their parents’ houses and starting families and lives of their own.  This is something each student on the Hill echoed regardless of the degree to which they are personally affected by the student loan deficit.  As the roughly 7 million students with student debt contemplate how they will face the reality of their futures, they are turning around and telling future generations something we were never told:  It is not worth it.  If you are incurring debt in your undergrad years, going to graduate school might be even further out of the question.  As one student shared yesterday, “Masters degrees have become the new bachelors.”  When students cannot afford the education needed to be hired for the jobs available, the effects are felt across the nation. We now have less than one month to ensure that students are not incurring even more unnecessary debt that does nothing for our economy but hold us back.

Kelly Mears
Intern for affiliate People For the American Way Foundation’s Young People For Program

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