Easing The Burden of Student Debt to Stimulate The Economy

Monday, June 09, 2014

Occupy Wall Street protesters stand in the private park next to Juan Pablo Duarte square before it is cleared by police following the groups early morning eviction from Zuccotti Park on Nov. 15, 2011 (Spencer Platt/Getty)

One of the biggest financial burdens facing young people in America today is the looming reality of student debt. It's a problem that carries a price tag of more than $1 trillion.

About two thirds of American college graduates leave school with some amount of student debt—on average, that amount is estimated to be above $26,000.

In response, President Obama is issuing an executive order today ensuring that young people who take out federal loans have their loan payments capped at 10 percent of their monthly incomes. The president is also calling on Congress to pass a bill sponsored by Democratic Senator Elizabeth Warren that would allow borrowers to refinance their federal and student loans at lower interest rates.

It's part of a solution to not just ease the burden of student debt, but to help stimulate the economy in the long term. But it's not without its criticisms from the GOP.

Heidi Moore, U.S. finance and economics editor at The Guardian, explains the proposal.

Guests:

Heidi Moore

Hosted by:

Todd Zwillich

Editors:

T.J. Raphael

Comments [5]

Dan from Houston

It would be good if Major and debt positions of the grads info showed up in the recruiting info. I hear some of the stories of debts and the major and jobs attained, and just end up wondering what the persons plan to pay back the debt was when they were taking on debt. Some of these majors from the more expensive private schools just have no conceivable economic payback.

Jun. 09 2014 06:34 PM
shari heinz from georgia

Being one that has never had any student debt as I went to work right out of school. I do not understand how a person would allow themselves to get so far into debt for an education that would never pay for the schooling to get there. You made the debt, you should pay is all back. And to defer and wait and wait to get a so called pardon from it is just asking for a handout. No wonder the government is in trouble.

Jun. 09 2014 02:15 PM
@WXSWIAF from Austin, Texas

One of the biggest financial problems facing our nation today is debt overhang: debt from the foreclosure crisis and debt from student loans. Both require flexibility from the finance sector to resolve, refinancing loans into lower rates overall and reducing principal (debt forgiveness) in specific cases.

High college costs is one reason West / Southwest IAF organizations developed 10 labor market intermediaries in Texas, Arizona, Louisiana and Iowa. We found that by supporting working adults on a career path that includes job training and connections to employers, people can move from survival wages to living wage careers without inordinate debt. This is good not just for students and their families, but also for the larger economy.

Human capital development is a key element of economic development. To the extent that higher education can be achieved without inordinate debt, graduates can immediately spend their higher wages on things like homes, cars and other consumables, contributing to growth overall.

Jun. 09 2014 12:51 PM
anonymous k

I owe $252,000 in Stafford loans. I first started college in 1989 and I made my first loan payment this month. My loans were consolidated and then deferred through the Department of Education. I just applied for deferments and forbearance until now. I'm finally able to pay now about $600/month on an income-contingent payment plan. Since I work for the government after 10 years of payment the balance of my loans will be forgiven. Great deal! I feel that I was lucky to be able to access higher education through the Stafford Loan program.

Jun. 09 2014 12:25 PM
rus roberts from albany oregon

I am not a recent graduate (received my MS in 2000), but I have not bee able to secure a position in my field. As such I have not earned more than $20k in any given year since. My student loan debt has been in near constant deferment, and with the continual addition of interest I now have a balance of over $100k. I am 47 yrs old and fear I may never pay this off, and if I do, it will be with my retirement, if I even get to retire.

Jun. 09 2014 12:14 PM

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