Those who haven’t paid off their student loans overwhelmingly want those loans forgiven by their lenders, according to a new survey released by online research firm, Instant.ly, a uSamp company. This should come as no huge surprise — irony alert — given how diligent graduates have been about paying off their student loans.
The current student loan default rate is 8.8%, the highest on record. The current student loan delinquency rate (defined as at least 90 days late on payments) is 8.92%. However, the actual delinquency rate is estimated to be closer to 18%, according to the New York Fed, since “about half of these loans are currently in deferment, in grace period, or in forbearance and therefore temporarily not in the repayment cycle.”
While a refreshing 65% of those surveyed by Instant.ly opposed bankruptcy as a way out of student loan debt, a full 81% of those surveyed with student debt said the government should participate in student loan forgiveness. Students and graduates without debt also overwhelmingly favored forgiveness of the debt for others (with 61% in favor).
In order to create the funds necessary for student loan forgiveness, 54% of respondents said the government should erase subsidies to oil and gas companies, the cliche whipping boys of people everywhere. Increasing payroll taxes on owners of private corporations was the second most popular option (20% favoring), while cutting spending from ObamaCare was nearly as popular (18% favoring).
While polls of voters of all ages continue to show the economy and the budget crisis as their top two concerns, among recent college graduates college loan debt sits near the top. According to the Instant.ly survey, 87% of 300 respondents — which included males and females with Bachelor’s degrees or higher — believe the rising cost of higher education is an important political issue. Furthermore, 70% of respondents said student debt is in the middle or at the top of their personal list of pressing election issues.
It’s no wonder. According to the US Dept of Education annual report , public college tuition has increased 15% on average over the past three years of the Obama administration. Meanwhile, in California, Texas, Florida and Arizona, tuition has skyrocketed to 40% or more at some state schools.
Nearly 20 million Americans attend college each year. Of that 20 million, close to 12 million borrow annually to cover costs. Given increased college student participation in the 2008 presidential election, both President Obama and Governor Romney will be dissecting exactly what factors and proposed policies will capture these voters in 2012.
So far, the student debt issue has tilted in favor of Obama. According to Instant.ly, 51% of respondents with student loans plan to vote for Mr. Obama, while 38% plan to vote for Mr. Romney. However, those numbers are fluid, especially because the tepid Obama recovery has been particularly hard on recent college graduates. According to last Friday’s atrocious August jobs report from the Bureau of Labor Statistics, nearly 400,000 people stopped looking for work in August. Many of those are recent college grads.
In order to help students manage their debt, the Obama Administration has attempted to regulate for-profit college and career training programs — source of the highest percentage of student loan defaults – through its 90/10 rule and upgraded “gainful employment” standard. Unfortunately, despite the Harkin Committee’s report on abuses at for-profit colleges — fully covered in the Crotty post, “For-Profit Colleges Thrashed In Congressional Report” – little has been achieved to date to dramatically lower student loan debt. The Obama administration’s reform efforts were not helped when in July a federal judge struck down its for-profit college requirements one week before they were supposed to take effect.
Governor Romney has pledged to keep federal student loans from going up and, in the process, has risked offending GOP deficit hawks. In an August pivot, however, he elaborated on his position by saying he didn’t support student loan forgiveness per se, but favored high quality jobs instead.
“It is very tempting as a politician to say, ‘You know what, I will just give you some money. The government is just going to give you some money and pay back your loans for you,’” Romney said. “I am not going to tell you something that is not the truth, because you know, that is just taking money from [one] pocket and giving it to the other pocket.”
Romney has a point. The U.S. is already facing a student loan repayment debacle, with “Big Short” savant, Steve Eisman, predicting that it will outpace in severity the government-induced subprime loan crisis, which precipitated the current jobs, GDP, and budget crises. Perhaps students should take these facts into account as they ponder taking on a mountain of debt, or before asking Uncle Sam to rescue them from their current financial obligations.
Moreover, maybe students should diligently study what majors are leading to high-paying jobs upon graduation. According to the September 11 Job Openings and Labor Turnover Survey (or JOLTS) press release, “there were 3.7 million job openings in the U.S. on the last day of July.” Many of those job openings are in the fields of Science, Technology, Engineering, and Math (or STEM).
Petroleum engineer, anyone?