Home > Student Loans > Sen. Al Franken: Millions of Americans Are Struggling to Pay Off Student Loan Debt & It’s Damaging Economic Growth

Comments 5 Comments

Last year, at the University of Minnesota in Minneapolis, I met Joelle Stangler, a sophomore who was the incoming student body president. Joelle had graduated from Rogers High School in Minnesota as the valedictorian, with a 4.12 GPA. Joelle doesn’t lack motivation.

Both of Joelle’s parents were teachers, and in fact she comes from a long line of educators going back six generations. But a couple of years ago, Joelle’s mother made the difficult decision to quit her job as a 5th grade teacher to go work in the private sector to help send her four kids to college. Even with her mom’s sacrifice, Joelle, who is finishing up her third year of college, already has $20,000 in student loans, and she estimates that her total debt will be around $35,000 by the time she graduates next year.

It didn’t use to be this way. Things have changed a lot since my wife Franni and I went to college in the early 1970s. A full Pell Grant paid for almost 80% of a public college education. Today, it pays for less than 35%.

Today, the total amount of student loan debt held by Americans is more than $1.3 trillion – more than the total amount of credit card debt in our nation. Student loan debt doesn’t just affect the individual lives of the 40 million Americans who carry the debt. Student loan debt also has an enormous negative impact on our nation’s economy. I recently spoke with Nobel Prize winning economist Joseph Stiglitz, and he explained that student loan debt dramatically limits people’s ability to buy a home, save for retirement and start a business. These types of big-ticket purchases help keep our economy growing, and delaying these acquisitions is damaging to the long-term well-being of our country.

So students are coming out of college with crippling debt that holds them back. Yet we keep telling young people that they need to go to college in order to aspire to the middle class. And that’s true; in fact, college graduates earn over 60% more per year than high school graduates. We should be encouraging more Americans to get a college degree, but they shouldn’t have to take on huge amounts of debt that will take decades to pay off.

Part of the reason that this debt is long term is because borrowers are paying high interest rates. Many college graduates are locked into loans with interest rates as high as 10%, which makes it all the more difficult to pay off. When interest rates are low, homeowners, businesses and even local governments regularly refinance their debts. However, the federal government – despite being the biggest student lender by far – offers no refinancing option to student borrowers. Once you graduate with high interest rates, you’re stuck with that high interest rate forever.

So I’m doing something to fix that problem. Earlier this year I joined Sen. Elizabeth Warren from Massachusetts in introducing the Bank on Student Emergency Loan Refinancing Act. Our legislation will allow borrowers to take advantage of lower interest rates and refinance their student loans. This will help millions of Americans, like Joelle, cut down their debt and keep more of their hard-earned paychecks.

I also wrote two bipartisan bills with Republican Sen. Chuck Grassley of Iowa that would help students and families better understand college costs before taking on debt. Our Net Price Calculator Improvement Act makes online cost-calculation tools more user-friendly in order to give students and their families a better estimate of college expenses before they decide where to apply. Sen. Grassley and I have another bill that will require schools to use a universal financial aid letter. Right now, these letters are confusing – they often don’t clearly explain the difference between a grant and a loan, which means students and families may take on debt that they don’t know they have to pay back. Our bill would make sure that students and their families get uniform information so they can make apples-to-apples comparisons between what the different schools are offering.

We have a lot of work to do and a long way to go to reduce student debt and make college more affordable. But it’s critical that we do. Addressing college affordability will not only make college accessible to more Americans, but it will also help more young graduates start a business sooner, buy a home earlier and start a family – things far too many young people have been forced to delay because of being saddled with college debt. That’s not only good for those graduates, but is enormously beneficial to our economy.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its affiliates.

More on Student Loans:

Image: John Taylor via Flickr

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

  • Billboy35

    Warren and Franken….now there are two powerhouses….

    • ken hulse

      Yes you are right Billyboy. It’s nice to see politicians who has the interests of the average person in mind instead of the corporate interests that buy politicians. Many modern successful countries make education free. If you want a better country higher education is key to attaining that.

      • Billboy35

        That was sarcasim….but thanks for playing.

        • GeoGuy

          Good one Billyboy35. What ever happened to working your way through college. I did, during the same time Stuart Smalley and his wife were getting a free ride from the Govt. As a USMC combat veteran I could have used the GI Bill, but my parents taught me that things you work for have much more meaning and value than those handed to you. But progressive liberals Stuart, Ken and Liz “Faux Native American” Warren don’t understand the concept of hard work. Why work when you can extend an upturned palm.

          • Billboy35

            Really you want to go there. I did as well. Took me almost six years but as you can tell from my icon, dayum proud of where a I went to school.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team