Students, our economic stimulus package has arrived.
And not a moment too soon, according to disconcerting figures on job market growth, average base pay and unemployment. The numbers we want to go up, like Northwest's job placement and the Dow, sag instead. The numbers we want to shrink, like unemployment and post-graduation debt, continually rise.
This is where President Barack Obama steps in. In a move that would relieve at least some of the burden from the 36 million Americans saddled with federal student loan debt, Obama's previously introduced income-based repayment program is getting a shot in the arm. The updated Pay As You Earn would "allow borrowers to cap their student loan payments at 10 percent of discretionary income," according to the White House Press Secretary. Starting in 2014, qualified borrowers will have the remainder of that load forgiven - or eliminated - after 20 years.
Besides wooing the student vote, this plan left Obama's desk with the intent to simply get people to college. Yes, it increases consumers' buying power by cutting the amount they have to sacrifice to repay loans. But Obama has a history of striving to educate the masses, and this plan is no different.
On a fundamental level, however, the proposal has its faults. For one, higher education is an elective. Some might even call it a luxury. In any case, it is a privilege, not a right. And while the Missourian staff applauds Obama for making an education more affordable, some of us feel that the government's role in debt reduction should be more proactive.
If educating people is crucial in boosting the economy, why wait until after a student's graduation to alleviate debt? Those funds would have greater effect by further supporting federal grants and scholarships. This leaves borrowing and, consequently, debt, to the consumer. It still achieves Pay As You Earn's objectives of getting more people through the musty gates of academia.
Pay As You Earn seems like a sensible solution to a problem plaguing the country's college students. It's a problem that's only getting worse (see infographic). Hopefully, this plan will keep students' earnings in the market and out of interest-laden debt payments.