(Source: Column by James P. Hoffa, General President, International Brotherhood of Teamsters, published in The Detroit News on June 12, 2013)
WASHINGTON, D.C. — Working people struggle and fight to form unions so their children can have better lives than they do. For many, that means sending their sons and daughters to college.
Higher education has long been the stepping stone to a better life. But that stone is being swept away by a tide of student debt.
The numbers tell a frightening story: As many as 30 percent of borrowers may be delinquent on their student loan debt. More students are borrowing than ever before, and they’re borrowing more – the average loan has increased by 49 percent, to $24,803, since 2005. Today, the average student in this country graduates with $26,600 in loan debt.
That’s hardly a way to get started in life when good jobs are scarcer than ever for recent college graduates.
American labor unions believe strongly in supporting education for our next generation. That’s why the Teamsters started the James R. Hoffa Memorial Scholarship Fund, which has given more than $4.7 million to 1,500 children and grandchildren of its members since 2001.
But that won’t be nearly enough to alleviate the burden on our young people – a burden that will get worse on July 1 if Congress doesn’t act. If Congress remains deadlocked, interest rates on student loans will double from 3.4 percent now to 6.8 percent.
President Obama wants interest rates to vary from year to year depending on the market rate, but would lock the percentage in for the life of the loan. The House passed a Republican plan that would tie interest rates to the market – increasing student borrowers’ interest payments.
And Democrats are largely calling for an extension of the current 3.4 percent rate for the next one or two years to give Congress a chance to revamp the federal student loan system. Last week, Senate Republicans blocked a proposal by Sen. Jack Reed, D-R.I., to freeze the rate at 3.4 percent for two years.
Sen. Elizabeth Warren, D-Mass, wants to go even further. She wants students to get the same great deal from the government that big banks get from the Federal Reserve. Banks, even the ones the taxpayers bailed out, now borrow money from the Fed at 0.75 percent. Warren points out the federal government makes a profit off student loans — $51 billion this year, according to the Congressional Budget Office. As she said recently, “Have we become a people who will support our big banks with nearly free loans, while we crush our kids who are trying to get an education?”
In Michigan, it seems, that’s exactly what Gov. Rick Snyder is trying to do. Last year, he led Republicans in the Legislature to slash higher education funding by 15 percent while giving tax breaks to corporations. This year, his education bill increases higher education funding by 3 percent, hardly enough to make up for the brutal cuts instituted last year.