|Increase in Loan Interest Rates Defers Black Students’ Dreams|
(TriceEdneyWire.com) - The recent efforts to protect students from facing interest rates on their student loans estimated to double by July 1, 2012, is critical to ensuring that the next generation of college students is financially able to contribute to our economy as opposed to becoming victim of its financial debt and distress.
With Black unemployment at 13 percent, a teenage unemployment rate that has remained static at 25 percent, and loan debt repayments exceeding $1 trillion, there is no question that ignoring the financial burden students will face upon graduation is setting them up for failure. Moreover, the disproportionately high rate of unemployment among teenagers combined with the student loan repayment obligations will potentially exacerbate the financial burden for the families of college students who have already begun sharing the cost-burden of the financial crisis. In fact, a recent University of Michigan Study reports that over 60 percent of young adults between the ages of 19 and 22 receive financial help from their parents to pay for college tuition, rent, and transportation.
For African-Americans and minorities who suffer from higher unemployment rates and debt burdens, the repercussions of the financial crisis will have devastating effects for our youth if interest rates on student loans are not reduced. Therefore, it is essential that the ongoing dialogue of increasing job growth and improving our economy begin with financially safeguarding the next generation of college students so that they will be better positioned to contribute to our economy and help it grow.
The Congressional Black Caucus Foundation understands the urgency of student loan reform and the devastating effects of efforts curtailing the ability to do so. Restoring stability and growth to our economy means working towards a better future for our youth. Additionally, it is essential that legislative efforts to recover from the financial crisis include serious reform of college student loans in a way that provide realistic opportunities for young people to secure good jobs and pay off their student loans without falling into financial crisis once again.
The need for financial support, and lack thereof, has lasting impact on the educational future of our youth. Education remains cost-prohibitive for many African-Americans who have the scholastic acumen to excel and compete at the best colleges and universities across the country. But the threat of looming debt upon graduation will cause our best and brightest to defer enrollment, or worse, not matriculate at all. In the past decade, CBCF has awarded thousands of scholarships to students across the country, and every year there is an increase in the number of applicants. There need is great, but the reality is that many students simply cannot attend college without student loans, scholarships and grants. According to the March 2010, Congressional Budget Office study on the Costs and Policy Options for Federal Student Loan Programs, the demand for federal student loans is on a steady uptick. New loans increased from $56 billion in 2005 to $97 billion in 2009.
Together we must make our lawmakers aware of the added financial burden our economy will undergo if we do not protect our college students from an interest rate hikes that will drive them into financial distress. We must also do the critical work necessary to reduce a strikingly high teenage unemployment rate that does not allow students to have the jobs they need to begin paying their student loan debt in the first place.
Dr. Scott is president/CEO of the Congressional Black Caucus Foundation, Inc. The CBCF, established in 1976, is a non-partisan, non-profit, public policy, research and educational institute intended to broaden and elevate the influence of African-Americans in the political, legislative and public policy arenas.