Senate Budget Committee discusses student loan debt “crisis”

By: Taylor Foshee, extern, Governmental Relations Division

Lawmakers have been taking more of an interest in issues surrounding student debt recently as the law governing student financial aid—the Higher Education Act—needs to be reauthorized or extended this year. On June 4, the Senate Budget Committee met to discuss the effect that rising student loan debt has on recent graduates and the economy.

Recent graduate and former president of the Student Virginia Education Association, Brittany Jones, spoke about the hardships facing many new graduates: “Student loan debt has been the driving force of my decisions for the last eight years of my life, and according to my current repayment plan, it is projected to be for the next 25 years of my life.” This echoes the concerns of many veterinary students today.

Not only is student debt a challenge for individuals, it has detrimental effects on the U.S. economy, explained Rohit Chopra, student loan ombudsman at the Consumer Financial Protection Bureau. For instance, “veterinary school graduates, whose debt averages over $150,000, are unlikely to be able to make a living in dairy medicine or livestock management in rural areas,” he said. This means that the livelihood of farmers and ranchers could be in jeopardy.

Dr. Richard Vetter, economic professor at Ohio University and adjunct scholar at the American Enterprise Institute, commented on the rising cost of university tuition and fees, saying that “the current student loan debt crisis would have never happened had college costs increased at a general rate of inflation.” He also blamed the “overinvestment of federal resources in higher education,” which has led to more students pursuing college degrees resulting in a rise in student debt.

Though there is much talk in the nation’s capital about rising student debt, yet little is being done to solve the problem. Senator Patty Murray (D-Wash.), chairwoman of the Senate Budget Committee, touted S. 2432, the Bank on Student Emergency Loan Refinancing Act, during the hearing, which would allow borrowers to refinance their federal student loans at a lower interest rate. According to the Congressional Research Service, this bill would help borrowers save an average $4,000. The Senate decided on June 11 not to move forward with the bill, but Senator Elizabeth Warren (D-Mass.), author of the bill, is pushing for another airing this year.

The AVMA supports legislation that would improve the terms and conditions of both private and federal student loans. For more information, see AVMA’s legislative agenda.

Though student debt is on the rise, The Washington Post Wonk Blog says that the return on investment is around 15-17 percent, compared to 6.8 percent for annual returns in the stock market, 2.9 percent for corporate bonds, 2.3 percent for gold, and 0.4 percent for housing. Reporter Dan Matthews says, “College is a much better investment than any of those, even if you drop out.”

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