In his State of the Union Address, President Obama promised that the US will “out-educate” the world. In his new budget, he is proposing $100B in cuts to Pell Grants and graduate loan aid. It will remove subsidies for federal graduate loans so that interest will accrue while the student is still in school.
I don’t think these cuts are totally insane, and may be smart in a different economic climate, but I don’t how see how even small cutbacks to opportunity to education or an increase in the burden of an education over the long-term are appropriate actions to make now.
I graduated from law school in May with a decent amount of loans (and a job, fortunately). I only have federal loans, but the interest rate is 6.8%. Direct PLUS loans are now 7.9%. All while mortgage rates are now about 4-5%. It’s frustrating and expensive. Many of my friends graduated with mostly private loans at 7%+ and a total debt load of $100-200K. And most don’t have jobs. Attending law school at this time was probably not the best move for many of them, but decisions always look different in hindsight.
There has been nothing to help these people, though. Student loans are still all but impossible to discharge in bankruptcy, there’s been no change in the interest rates (at least on federal loans), and no haircuts. There are tens of thousands of underemployed, over-educated, and seriously in debt people out there today – and they are the ones actually doing pretty well, comparatively.
Much more disturbing of the proposed budget cuts involve cuts to programs for the poor. Cuts to heating assistance and community block grants are downright offensive in the current climate.
All this while the President is promising to become friendlier with the business community. Ugh.
I still don’t understand where all the promised investment in the SOTU are going to come from, except possibly by harming other worthy programs. And even these proposals were pretty timid. What about real investments in education and infrastructure? Why not a huge expansion in Pell Grants? A real effort at high-speed rail?
I think the difference in the Two Americas is only to get worse over the years to come because of actions taken today.
What do others think? Will we fondly look back at the Obama administration as a time when wealth disparity and the disparity of opportunity shrank? Or will we look back with a deep sense of regret as a time full of many missed opportunities?