Local Explains It All: Romney Vs Obama On Student Debt
By Raj Sidhu
While you’ve most likely already decided who to vote for (or not to vote at all — we get that), it’s important to remember that we, as students and graduates, will live in an economy defined by the policies of the next president. The past two months have revealed of the candidates’ positions on student debt, and should help you come to a clearer understanding of what that mountain of cash you owe will look like in 20 years.
Here’s the gist: when it comes to the issue of student debt, it’s a little funny how cleanly both candidates adhere to their respective party line. The President displays an impractically reckless largesse in his attitude towards students in a debt-ridden economy. Meanwhile, Romney perfectly delivers the DIY, Randian rhetoric that has become the framework of the new Republican platform — “you’re not getting a cent from us, so stop whining.”
Your life with Barack:
While President Obama has unveiled several positive measures directed at the students who voted for him in 2008 and whom he hopes will vote for him again in 2012, the true cost of those programs is, as of yet, hard to measure. In 2010 he limited the federal borrowing rate to 3.4%, and eliminated subsidies for private lenders, redistributing billions of dollars towards Pell Grants. In 2011 he motioned to cap monthly repayments at 10% of discretionary income by 2014 (they’re currently at 15%). Earlier this year he introduced the Student Loan Forgiveness plan, which would erase federal student aid after 20 years of consistent minimum monthly payments.
These are surprisingly good steps in the right direction, but they do little to alleviate the hardships of current grads, and raise concerns over how the President plans to pay for these generous gestures. Unemployment and underemployment for grads is at its highest since WWII (53%), and average student debt has increased to $28,600. This is to say nothing of NYU students, who graduate with 40% more debt than the next average student. NYU professor Andrew Ross, who helped to launch the “Occupy Student Debt Campaign” notes that “a shocking 41 percent of the [NYU] class of 2005 is either delinquent or in default” on their student loans.
Your life with Mitt:
Quite frankly, Mitt’s not off to a great start. Running mate Paul Ryan, for instance, authored a bill last year which would double student loan rates and cut the Pell Grant program by over $200 billion. And Romney himself, in between awkwardly suggesting that students simply borrow more money from their parents to make ends meet or enlist in the army to receive entitlements, has vowed to bring private lenders back into the equation — a move that would cost taxpayers billions of dollars by reinstating government subsidies to banks and eliminating its capacity to collect modest interest on federal loans.
Romney has also put his foot firmly down on the notion of loan forgiveness, advising, “Don’t take on too much debt, and don’t expect the government to forgive the debt that you take on.”
This is, it seems, where Romney’s thoughts on the problems of higher education end — at a place that is deliberately contrarian to Obama’s position and substantially less substantial. He seems to rely on the Ryan plan as a crutch, but has also distanced himself from it by claiming that he supports a 3.4% borrowing rate and that he disagrees with Ryan’s dogged insistence on gutting the Pell Grant. This is confusing, because Romney has been promoting policies which would have an equally negative effect on the resource.
Your life either way:
While the benefit of Obama’s policies may take years to manifest for recent grads and Romney is reasonably apathetic to the whole affair, the effect of both candidates on post-graduate salaries is extremely telling. Graduates in 2011 were projected to make an average starting-salary of about $50k/year. According to a web app by Politify which determines which candidate will be more financially beneficial for you depending on your tax bracket, Obama and Romney have a virtually identical effect on what you’ll take home each year after graduating, with Romney taking a slight edge over Obama.
