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U.S. Senator Heidi Heitkamp (D-NPL) visited Valley City State University where she met last Thursday with the public along with VCSU president Dr. Steve Shirley as well as the presidents of Jamestown College and Mayville State University.
The purpose of Heitkamp's visit was to discuss student loan reform and a new law recently signed into law by President Barack Obama.
The law makes it easier for students to pay back their federal student loans. Starting in 2014, new student loan borrowers will not be required to pay more than 10 percent of their disposable income. The president recently proposed expanding this benefit to current student.
Also included in the law; loans will be forgiven after 20 years if the student makes payments on time. Those going into public service job, (i.e. teachers, nurses, military service) could have their loans forgiven in 10 years after making payments on time.
"Student debt in this country has exceeded $1 trillion," Heitkamp said during the session. "It is in excess of any other debt with the exception of mortgages."
Heitkamp went on to explain that student loan debt is a leading factor on why young people have trouble purchasing homes, it's a leading reason on why young people don't save toward retirement, and the reason more students take longer than four years to earn a bachelor's degree than in the past; students now need to spend more of their college years working and less time in class.
According to Heitkamp, initially she supported an extension of the old student loan program because she wanted she wanted a broader perspective on student debt. She wanted to address the issue of affordability and restructuring existing student debt. Then she began wondering why "we were just kicking the can down the road."
Eventually, Heitkamp told her peers she would support a permanent solution that provides variable rate interest as long as it had a cap. The cap is now 2.05 percent above the ten-year treasury, locked in for anyone who receives a student loan during this school year.
What Heitkamp wants to see is consumer education. "When kids borrow money we just slide them a piece of paper and that's it," she said. She wants to really require kids to sit down and do amortization schedules.
"My parents taught me how to balance a checkbook and reconcile my account every month and all of the things that you learn how to do that we just don't do anymore. And budgeting, that's a foreign concept. You just spend until the money's not in the account anymore and call Mom and Dad or see if you can find another source of higher-interest lending.
There is a part of this that is consumer education, part of it that is financial literacy that needs to be addressed," Heitkamp said.
Heitkamp and college officials concluded their conversation with how colleges and universities can keep their costs down to keep tuition rates low with Shirley pointing out that VCSU is in the completion phase of its first major building project (the Rhoades Science Center) in decades.
Read this story in Thursday's Times-Record.