Editorial: The student debt crisis is no joke
Student debt in our country is at a record high. That’s why this new bill passed in the Suffolk County Legislature that calls for a pilot program to help get control of that debt is so timely. However, much more should be done and the federal government will ultimately need to have a hand in it as well.
According to statistics, there are around 44 million people with student loan debt in our country. In 2018, that debt is at or near $1.5 trillion. That’s trillion! According to the website Investopedia (www.investopedia.com), school debt is just below mortgage debt ($8.88 trillion), but certainly higher than car loans ($1.22 trillion) and it’s considerably higher than credit card debt (over $830 billion).
The amount of school debt—with an average individual burden of over $30,000—makes it that much more difficult for those that owe to own a home, especially here on Long Island, where the cost of purchasing and maintaining a house can be astronomical. The county bill calls for the Department of Economic Development and Planning to come up with a program that would give first-time homebuyers an opportunity to also pay down their student debt by allowing their loans to be combined with a mortgage. It’s a great idea, but even that will only go so far.
It’s important to keep in mind that one of the biggest lenders of student loans over the years has been the federal government. The interest rates of these loans have been considerably higher than those from private lenders; some of them have risen to as high as 7.595 percent over the past year. Not surprising, the new rates took effect on July 1, just in time for the fall semester. Congress did recently set a ceiling for the government loans, though: undergraduate fixed rates can’t go above 8.25 percent; graduate loans at 9.25 percent; and parent loans at 10.5 percent. That’s fine, but the debt situation still isn’t going to get any better.
Congress really needs to find a way to lessen the interest rates of existing student loans and perhaps also create a lending system that will not perpetuate this burden on future generations. In the meantime though, Suffolk County’s initiative—which could help people pay off a loan and get into a home—is a very good step forward.
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