An article on how this election will impact the future of student loans was posted by Leila Mustafa of The Daily Campus. It discussed the different courses of action that would be taken by the candidates. I believe that each of the different programs has benefits and drawbacks.
The election is less than one week away, and whether the win goes to President Barack Obama or Gov. Mitt Romney, the election results will have an impact financial aid and student loans at American universities. However, college-aged voters might be more concerned with which candidate they believe will bring more jobs rather than improve their student loan plans.
In 2010, Congress passed the Health Care and Education Reconciliation Act, which included increases to the Pell grant scholarship, eliminated the federal guaranteed student loan program, capped student loan repayment amounts and changed student loan forgiveness periods for those who qualified.
The federal guaranteed student loan program subsidizes student loans issued through private lenders. The Obama administration suspects that shifting away from subsidies to private loans will save about $60 billion over the next 10 years. The act invests more than $40 billion in Pell grants and increases the maximum Pell Grant award from $5,500 to $5,975 by 2017.
Romney would alter what Obama has planned significantly if elected. His education plan “A Chance for Every Child” states that Pell grant dollars should be refocused to students “that need them the most” and aims to tighten eligibility requirements for the grants. Romney believes his plan to grant subsidies to private lenders would bring private lenders back to make for a more efficient system.
In his plan, Romney mentions that Obama’s plans could drive tuition to continually increase, especially given Obama’s plans to relieve graduates of repaying loans after a certain amount of time. The Department of Education statistics under the Obama administration has seen an inflation-adjusted 12 percent increase in tuition at public universities.
In an analysis from March 2012, the Federal Reserve Bank of New York estimated the national student loan debt to be $870 billion.
With this kind of ballooning debt, it appears that student loan debt may be the next bubble to burst.
Related article: Election will affect student loans