With the nation’s student-loan debt approaching $1-trillion, and default rates at their highest level in a decade, President Obama is taking modest steps to ease students’ debt burdens.
Mr. Obama and administration officials announced changes this week that will reduce monthly payments for low-income borrowers and drop interest rates for students who consolidate into the government’s direct-loan program.
The announcements–which came as the Occupy Wall Street protest stretched into its fifth week, fueled in part by borrowers with large educational debts and slim job prospects–were billed as a response to petitions urging the president to forgive student loans to stimulate the economy.
But the president’s plan is a far cry from the kind of relief that the Wall Street protesters and other debtors are demanding, and it won’t do a thing to address the roots of their repayment struggles: rising tuition and high unemployment.
Tuition and fees at the nation’s four-year colleges climbed sharply again this year, though rising federal grants and loans took some of the sting out of the increases.
At four-year public colleges, in-state tuition and fees for the school year beginning this fall rose by an average of 8.3% from the previous year, to $8,244, amid declining support from state legislatures, according to annual reports from the College Board, a nonprofit that conducts collegiate research. The total cost including room and board rose 6% to $17,131.
At private colleges, tuition and fees rose by an average of 4.5% to $28,500, as total costs including room and board jumped 4.4% to $38,589.
The markedly quicker rate of increase at public schools continues a decade-long trend that has narrowed the price gap between the two. This year, the average tuition-and-fees price of a four-year public college is 29% of the private-college price, compared with 22% a decade ago.
“While the importance of a college degree has never been greater, its rapidly rising price is an overwhelming obstacle to many students and families,” said Gaston Caperton, College Board president.