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April 18, 2015

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Cost of a degree will get worse if Congress doesn’t act

In the 21st century, a college education should not be for the lucky few. It should be an opportunity for all committed students to build their skills and improve their lives. Those who have done everything right in their academic careers should have a chance to follow their dreams and chart their course for a bright future.

Unfortunately, the cost of getting a degree has been rising faster than inflation for far too long. Tuition rates at four-year colleges and universities have risen over 32 percent in the past decade, and many young Americans are overwhelmed by historically high levels of student debt.

To many, the doors of opportunity appear to be closing. Student loan debt, which stands at $1.1 trillion, now exceeds credit card debt in the United States. This debt problem will only get worse if Congress does not act soon to prevent a student loan rate hike on July 1. If Congress stalls, interest rates on subsidized Stafford student loans will double for more than 7 million students, from 3.4 percent to 6.8 percent.

This is a serious problem, and that’s why I recently hosted a roundtable discussion with Nevada students struggling to afford their education. One student told us something he had never shared with anyone: To save money while attending college and working as an intern, he lived in his car. Another participant told us about her wish to become a nurse and to be able to send her son to college. Unfortunately, she can’t afford her mortgage as it is, so their futures have been put on hold.

Washington needs to act to make college more affordable, but instead of helping students and families, House Republicans have passed legislation that would make college more expensive. The GOP plan looks surprisingly similar to an adjustable rate mortgage in its variability: something Nevadans know all too well can create a dangerous false impression of low rates. With rising college costs and increasing student loan debt, this bait-and-switch scheme is not a solution.

The nonpartisan Congressional Budget Office predicts that this plan will create nearly $4 billion in new student loan interest charges over the next several years. We constantly hear from Republicans that we must not burden future generations with debt, but this is exactly what their legislation does. While interest rates for banks are at historic lows, Republicans want to more than double the cost of loans for students.

Making college more affordable is crucial to fostering America’s economic competitiveness. Business leaders know it. Students know it. If more of today’s students cannot afford college, businesses will not have the workers with the education and training they need to keep our economy competitive and dynamic far into the future.

Democrats in Congress have previously overhauled the college student loan program — ending a flawed system that gave away billions in federal subsidies to private banks that simply acted as middlemen and putting those taxpayer dollars directly in the hands of students to pay for their education. There is still much more to be done, and that’s why I supported legislation that would have prevented a loan rate hike. It was blocked by Republicans in committee, but the fight is not over.

Congress must stop this rate hike and ensure financial aid opportunities afforded today will be available to future students. The cost of college loans should not prevent students from furthering their education. I am an ally of students in this fight and will continue to advocate for lower rates for them in Washington.

Rep. Steven Horsford, a Democrat, represents Nevada’s 4th Congressional District.

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  1. We must keep the "American Dream" alive for all those who aspire to be the best that they can be, for those who strive to give back to society for the magnificant opportunity they seized by advancing their education.

    Our country cannot afford to turn its back on those whom it has invested 13 years of public education. Dreams exist on a higher plane where precious few have the courage, character, and strength to go that extra life mile to reach beyond what already exists. It is a place where innovation, creativity, and design become manifest, bringing forward gifts that make our world better. Let them rise, empower them to evolve into human beings who are and will serve the greater good.

    To deny fair and equal access is to blantantly pick winners and losers, something quite contrary to the very foundations of our great land. For all who set foot or dwell upon the land of the free and home of the brave must still have a place under the sun where their dream can still come alive by engaging opportunity and having just and fair access.

    Blessings and Peace,

  2. Hey, all those college grads complaining about competition from other college grads wont have anything to complain about in ten years!

  3. Add to this problem, the growing number of students entering on line educational institutions with unawareness that most employers don't recognize on line degrees. You can credit unawareness to fact that owners of these public educational institutions also own large news media. Our nation today appears to be textbook example of bad government and conflict of interest. In order to repair our society we must begin removing conflicts of interest. A useful tool for such would be publicly funding a national segment of media to compete with that owned by titans of industry.

  4. Tution raes rise exponentially as more aid becomes available. It's obvious that too many people go to college as it is...half of first time college students don't earn their degree in 6 years. And they are stuck with student debt..recent changes have made this debt non-dischargable.

    2/3 of college students graduate with debt, an average of $24,000 per student. And,because their degrees are in worthless subjects, they get jobs as waiters, cashiers and janitors. We really need to reconsider the "college for everyone" mantra.

  5. The problem that I have with this is that we are not talking about addressing the rising costs of education, just addressing the interest rates. At the end of the day, if we do not address the costs, even extremely low interest rates will not help make college affordable. I left graduate school in the early 90's with around $20,000 in debt that was all at 7-8% interest for 10 years. If that was 3.5% interest, the difference would have been maybe $60/month. (My rough back-of-the-envelope math). But if you apply the rate of inflation of education to the amount of my loans, someone in a similar situation might have over $100,000 in debt. I took my first job after leaving the school for $30,000 a year, a salary that adjusted for inflation would be maybe $50,000 today. While the interest costs matter, they are being swamped by base cost in getting a college education and nobody talks about addressing that. The increases in the costs of higher education have outpaced the rises in the cost of healthcare, but the latter seemed to be a reason for action and the former is not.

    Just to throw some rough numbers out there, would we not be better off with students getting 7% loans for $40,000 rather than 3.4% loans for $100,000. The payments are roughly half as much even with the higher interest. That difference is roughly the difference in inflation cost of education versus other things. The cost of the 7% loan for the lower amount is cheaper than a 0% loan for the higher amount. We need to address the underlying price increases because the rest is just a short term fix and not much of one at that.

    And part of keeping costs down for students is preparation before they go to school. Help them be ready for it so that they do not spend a lot of time and resources on remedial learning. If nothing else students should be steered toward lower cost community colleges and such to get them started rather than paying higher four-year school costs to get caught up. That can also help them decide if they are ready at that point to go to college. As many people have said, not everyone should go and there are plenty of jobs that can pay well with a different sort of education.

  6. Representative Horsford,

    You are no doubt aware that the cause / effect of which you wrote is student loan guarantees / price increases.

    Sir, why would you advocate a solution that will certainly produce higher prices and more indebtedness?


  7. Students NEED TO PAY THE ACTUAL COST of higher ed, less the taxpayers LARGE SUBSIDY to the university system. PLAN ON paying interest on your student loans. Interesting that national media now says, more and more, than a college degree is not worth it unless Mommy and Daddy are paying for it and you're guaranteed a starting job in upper management in the family business OR you qualify for an Ivy League school OR you're going into engineering, medicine, the hard sciences. PLAN ON WORKING YOUR WAY through college like we have done for generations BEFORE student loans for everybody. Students who don't do well in K-12 should CONSIDER OPTIONS or plan to pay for an additional year of "higher" ed to take the remedial courses. And do ya think you're gonna do well? Stats vary from year to year but a whole bunch of dreamers DROP OUT in the first year--cause you have NO IDEA WHAT IT TAKES. How you gonna repay those loans when no one will hire an "overqualified" college grad with a major in teaching, anthropology, marketing....?

  8. Mr. Horsford FAILS TO EXPLAIN THE REALITY that many hundreds of thousands of non-committed students are going to college at our cost and without prospects to do well. Just another DRAG ON OUR ECONOMY.

  9. Newman 9:23: Would those super-high comp packages for "professors" and instructors have something to do with the exploding costs of higher ed? Many Profs get upwards of $400,000.

  10. "publicly funding a national segment of media to compete with that owned by titans of industry."

    Excellent. I'll write H.R. tomorrow.

  11. The Community College generally does a much better job of providing educations which are useful all over, in smaller cities, towns and rural environments.

    The CC catalogue can be easily downloaded contains a wealth of useful classes and subjects that can provide employment and it only takes two years to complete.

    The employment opportunities are sparse for high level degrees and a graduate must be willing to move anywhere in the US to secure employment, generally in a larger city and they can be far and few between.

    I've talked with students in Civil Engineering who have Masters Degrees but can't find a job. They call to find out how to learn AutoCad drawing and to make themselves useful, but digital CAD and Illustration programs aren't proficiently taught 4 year Universities so they must go back to a Community College to learn practical skills.

    A person can spend 5 years earning an engineering degree and they still will NOT know how to design a working object. Colleges teach the technical material, not tolerancing and trade-offs. These are learned with OJT and make the difference between real engineers and debaters.

    A 4 year degree NEVER prepares anyone for lifetime work. Their career will only last about 15 years and then economic turmoil, recession, depression or business failure will come along like a plague put the 40 year old out on the street and looking for a job that they probably WILL NEVER recover. If a loan can't be paid back in 10 years, it's too much.

    Graduating in 1/2 the time cuts the expense by more than half and if you aren't interested in getting a Nobel Prize or studying relativistic particle interactions, makes a lot more sense.