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Thursday, May 3, 2012

Clarke’s plan for student debt forgiveness gets attention

Posted By on Thu, May 3, 2012 at 1:02 PM

U.S. Rep. Hansen Clarke, a Detroit Democrat, is mentioned in an editorial in The Nation magazine regarding the student debt crisis.

Clarke has introduced a bill calling for forgiving of “up to $45,520 in student debt after a borrower makes ten years of payments at 10 percent of income.”

As the lefty magazine reports, student debt is crippling — not just for the young people directly burdened by it, but also to America’s ability to remain competitive:

“The student loan crisis has had two effects. The United States, once the leader in the percentage of college graduates age 25 to 34, has dropped to 16th among 36 developed nations, with more and more students dropping out because they can’t afford the rising costs. The second effect is ruinous debt: the average indebted college graduate is $25,000 in hock. Total student debt exceeds $1 trillion — now greater than credit card debt. And student debt is inescapable. Bankruptcy rarely extinguishes it; even Social Security payments can be garnished in case of delinquency.”

But the question of what to do about debt that’s already been incurred isn’t the only matter that needs to be addressed. The editors rightly argue that, for America to prosper, higher education has to again become more easily accessible.

“Making public college (or advanced training) free for those who merit it isn’t a radical idea. For many years the United States led the world in free K–12 education. The GI Bill paid for college or advanced training for a generation of vets after World War II, which gave us the best-educated citizenry in the world and broadened the middle class. As recently as 1980, Pell grants covered 69 percent of public college costs; now they cover less than 35 percent.”

Providing free college educations would cost an estimated $30 billion annually. Among the many benefits of that, the magazine argues, would be “a better-educated citizenry, and young people could be more entrepreneurial and more public-spirited.” There are also ways to pay for it. The Nation suggests instituting a small tax on all Wall Street financial transactions. Such a tax, it is pointed out, “would raise many times” that $30 billion sum.

The problem is that “Washington is too paralyzed by the elite fixation on austerity and too polarized by partisan divides to consider anything this bold.”

As a result, it is argued, reform will only come through outside pressure from students, their parents and those able to see the obvious wisdom in lowering barriers to higher education.

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