Drowning in Debt: Washington and the Unjust Student Loan Crisis

Loyola University students in New Orleans at their graduation ceremony at Mercedes-Benz Superdome in 2014. (CNS photo/Kyle Encar, courtesy Loyola University)
Loyola University students in New Orleans at their graduation ceremony at Mercedes-Benz Superdome in 2014. (CNS photo/Kyle Encar, courtesy Loyola University)
It’s May, which means that graduation ceremonies are happening across the United States. Behind lofty commencement addresses about the value of graduates pursuing their dreams and living life to the fullest is the grim reality that so many of those aspirations will be put on hold as graduates struggle to pay off increasingly unbearable amounts of student loan debt.

According to a recent study, about 70% of the Class of 2013 graduates left college with an average of just under $30,000 in debt. That amount is expected to rise even more this year.

The issue of student loan debt isn’t just an economic question, because as the Catholic Church recognizes, education isn’t just a consumer good, but a fundamental right and a building block for human flourishing.

Pope Francis has recognized the problem with the current consumer-based education model. “We will not change the world if we do not change education,” he said earlier this year.

There’s been a little movement on this issue in Washington, specifically from Massachusetts Senator Elizabeth Warren. Earlier this spring, Senator Warren proposed legislation that would refinance old federally subsidized student loan agreements to current rates, which are under 4%. The legislation would be paid for through higher taxes on top earners.

Republicans successfully blocked the legislation, arguing that while there is indeed a student loan crisis, Warren’s fix wasn’t the answer. A similar Warren proposal was also defeated in 2014.

Some policy experts think the Warren plan doesn’t strike at the core of the problem. Refinancing student loan plans from 6.8% to the current 3.9% would only save $7 a month for someone with $5,000 in student loan debt.

In fact, the biggest winners of the Warren plan might be the wealthy. According to a 2014 study, the top 25% of wealthiest Americans would financially benefit the most from a student loan refinancing plan like the one Senator Warren is proposing.

So what’s the alternative?

Democratic Virginia Senator Mark Warner and Republican Florida Senator Marco Rubio introduced legislation that would streamline the payment process by automatically linking all payments to income. Automatic payments, they argue, would encourage prudent borrowing and protect borrowers from default.

And perhaps most importantly during this time of government austerity under GOP congressional, the Warner-Rubio fix wouldn’t cost nearly as much as the Warren plan.

Any action on the issue would be welcomed within the Catholic educational community. Many Catholic institutions’ rising tuition rates threaten to box out low-income students from a Catholic education. A freshman at the University of Notre Dame will shell out nearly $60,000 next year for tuition and housing.

This is especially problematic for a church whose faith teaches that God has a bias for the vulnerable and therefore calls on its people to also have a preferential option for the poor.

But the rising cost of higher education is a trend at educational institutions nationwide, and it’s likely that any fix is going to have to include significant action from our elected officials.

With the current state of Washington, it seems like a long shot, but as Scripture reminds us: “nothing is impossible with God.”