Students need more relief from loans and tuition

If you’re afraid to graduate from college because once you leave you’ll need to sell your soul to cover those student loans, you’re not alone.

American students are leaving college steeped in debt.  The average graduate will leave school with nearly $20,000 in student loans. And nearly two out of five of us will have racked up at least $30,000 in loans before donning the gown and tassel.

President George W. Bush signed a bill last week that will cut federal student loan interest rates in half and increase the maximum Pell Grant award by about $1,100 over the next five years. Maximum monthly loan payments will be kept below 15 percent of discretionary income, and if in 20 years you’re still slogging away trying to pay off those student loans, the federal government will forgive your debt.

In Montana, Gov. Brian Schweitzer capped tuition through 2009, meaning – in theory – college costs will stay flat until the end of the next school year (unless you count increases in student fees and the rising cost of textbooks).

Advocates for affordable education are praising the new College Cost Reduction and Access Act as an important step toward ensuring education for all Americans.  It’s a good start, but these measures will only slow the bills many of us are piling up to finance a college degree.

Over the last five years, tuition costs jumped 35 percent.  Last year’s hike averaged about $344 nationally, reports the College Board, a non-profit group charting trends in higher education.

Because of skyrocketing tuition, more than $17 billion in private student loans were paid out last year, up from $4 billion in 2001, the AP reports. And outstanding student debt has doubled since 1995, exploding to $85 billion last year.

Largely because of rising tuition, almost two out of five college students will leave school before graduating.  The U.S. has one of the highest college dropout rates in the industrialized world. 

With no end in sight to escalating tuition costs, the extra $500 Pell Grant paid to the neediest among us next year will help, enabling them to continue treading water.  But it won’t stem the dropout rate or provide enough of an incentive for low-income kids to quit their jobs and come to school instead. 

The Cost Reduction Act is cutting federal student loan rates, dropping them from the current 6.8 percent to 3.4 percent by 2012.  That cut averages a savings of about $21 a month over the course of a 20-year loan.  It’s a nice break, but not enough to keep us from drowning in our debt. 

If the United States wants to maintain its place at the top of the global food chain, it must take even greater strides to make education affordable for everyone.