Suze Orman—The New York Times best-selling author, financial advisor, and television show host—expressed outrage that interest rates on student loan debt was set to double in July from 3.4 percent to 6.8 percent, urged students to be aware of the consequences of student loan debt, but also expressed hope that Congress would pass legislation to change some of the current laws that restrict people’s ability to deal with their debt.
“It should be mandated that [3.4 percent] is the cap and they shouldn’t go higher than that. They should be the lowest possible interest rate out there. Absolutely lower than car loans or loans for a home mortgage,” Orman said.
Yet, Orman also emphasized the need for students to understand student loans before taking on large amounts of debt.
“It should be mandatory that you can’t take out a student loan until you have passed a student loan exam,” she proposed.
Orman warned that the country was on a dangerous path and that solving the problem of the student debt crisis was an absolute necessity.
“If we are raising people today that can’t pay their student loans, they then don’t even go and do what their degree is in because they have to pick up any job they can so that they can pay off this loan,” Orman said.
Rep. Bobby Scott (D-Va.), who began the conversation today, emphasized the significance of the student loan debt crisis and its impact on the ability of students to attend an institution of higher education.
“We can’t allow the crisis to discourage students from obtaining a college education,” he told Campus Progress.
When asked about his thoughts on moving legislation forward in the difficult and divisive climate in the House, Scott noted that it would be “difficult.”
Cohen and Bass have both recently introduced legislation that seek to reduce the burden of student loan debt. In February, Cohen introduced the Private Student Loan Bankruptcy Fairness Act of 2013, which, if passed, would treat privately-issued student loans in the same way that other kinds of debt are treated in bankruptcy. Cohen asserted that the student debt crisis is the “next big problem we have in this country because there’s so much debt out there that students have.”
Last month, Bass introduced the Student Loan Fairness Act, which would cap borrowers’ monthly payments at 10 percent of their discretionary income. Bass highlighted the need for public outrage on this issue.
Christopher Huntley, a student from Albany, NY, is graduating in May with student debt. He told Campus Progress that he attended the event because he wants to learn about fiscal responsibility so that he does not have financial issues in the future. When asked about what policies he would like to see introduced in Congress, Huntley pointed to one of the ideas Orman presented.
“I think one of the things she said today about making it so that when you defer or when you default, it’s not reported to the credit agency, because building credit is vital to doing everything you want to do in America, whether it’s buying a house or a car,” Huntley told Campus Progress.
Politicians have taken notice and have offered solutions to tackling the student debt crisis. Most recently, President Barack Obama included in his budget proposal a plan that would tie interest rates on student loans to the market rate. While this may be helpful by keeping interest rates low in the short-term, there's concern that future generations of students could face very high interest rates because there is no cap to how high the rates can go.
To learn more about Campus Progress's campaign to tackle educational debt, visit www.itsourinterest.org or join the conversation on Twitter with the hash tag, #ItsOurInterest. Or, use the form below to share your story with us!