By Katie Burke, Daily News Editor
Published February 4, 2013
Among forefront policy issues, student loan debt isn’t high on the list, and was only briefly mentioned in http://michigandaily.com/article/01obama-focuses-equality-student-loan-d... “>President Barack Obama’s second inaugural address.
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Grimes said in the cases of 2008 and 2013 loan debt, lowered standards for lending made it easier to own a home or go to college, and the nature of these loans makes for “an unnerving parallel” between the past and present situations.
What comes next?
There is no clear solution to the mounting debt that student loans are creating; however, University experts have been considering the future of the issue.
Education Prof. Edward St. John said federal loan programs aren’t running as proficiently as they should.
“Pell Grants has been an Obama issue. He sacrificed funding for other need-based grant programs in order to maintain Pell, but we haven’t maintained Pell at a level that is efficient to pay the average need of a low-income student,” St. John said.
He suggests education funding should be worked out within states in order to increase levels of efficiency and fairness in policy for such programs.
Low community college funding adds to the attractiveness of for-profit institutions, leading to higher completion rates for such trade-specific schools compared to less-costly community schools.
St. John said the problem lies in the inaction of past generations and explains the current administration must work to decide the future attitude of the nation towards student loan debt.
“In general, we haven’t faced up to the issue as a society as to whether we want to be a lending nation or not,” St. John said.
Kimball, the economics professor, said the current pessimism will prevent any major student loan debt crisis from occurring on the same scale as the 2008 mortgage debt crisis.
“There will always be some losses on student loans,” Kimball said. “I don’t see anything sudden happening."
Grimes said it is important to continue to encourage college enrollment and lending for all socioeconomic backgrounds; however, caution must be exercised in which institutions the investments go to. He added that along with potential reforms, standards for lending should be tightened on the federal level.
“It’s really hard to think about what’s happening, what sort of monster we may have set up here. We don’t need another financial crisis.”