American families today are facing extraordinary financial challenges on many fronts--the rising costs of health care and housing, the need to save for retirement, and the ability to pay for their children's college education. To pay for college, families are borrowing more. Two-thirds of all students now graduate with student loan debt, compared with less than half in the early 1990s. Debt per student has tripled over the last two decades, even after accounting for inflation. To respond to this growing concern of many American families, The Pew Charitable Trusts announces the Partnership to Reduce the Burden of Student Debt. The two-year, $3.5 million initiative joins the Trusts-funded Retirement Security Project as part of the Trusts' focus on issues related to family financial security.
“Families today are increasingly feeling the financial squeeze when it comes to saving for retirement and paying for a mortgage, health care, and their children's college education,” said Rebecca W. Rimel, president and CEO of The Pew Charitable Trusts. “This initiative is aimed at reducing the financial burdens associated with earning a college degree, and thereby giving our young people the best chance at success while also strengthening our nation's competitiveness.”
The initiative comes at a time when the Bush administration and bipartisan policymakers are considering ways to use existing taxpayer dollars more effectively to help families pay for college. For example, last year Congress partially closed the so-called “9.5 percent interest loophole” in the federal student loan program and applied the savings to a loan forgiveness program. In the coming months, Congress will decide whether to fully close this loophole and how to use the resulting savings. The Partnership plans to work with students and parents, business leaders, youth engagement organizations, educators and others to bring attention to the growing burden of student debt and identify ways to use existing taxpayer dollars more efficiently and effectively to respond to the problem.
Federal student loans remain a sound investment. College graduates on average earn one million dollars more over their lifetime than high school graduates. Yet, there are negative consequences to the nation's increasing reliance on student loans. Some students, especially lower income students, forego college all together to avoid going into debt. For those who do attend college, their student debts upon graduation may deter them from buying a house or starting a family, saving for a child's education or for retirement, or pursuing certain lower-paying public-interest careers such as teaching.
“Just as the Trusts-supported Retirement Security Project has helped identify practical ways to increase retirement savings, this initiative is intended to be a resource to policy makers seeking achievable solutions to the concerns about mounting student debt,” said Maureen Byrnes, director of the Trusts' policy initiatives and the health and human services program.
Working with other funders and non-profit organizations, the Partnership to Reduce the Burden of Student Debt will collaborate with leading experts from across the nation to conduct nonpartisan research and analysis and identify practical policy options and ways to pay for them with current taxpayer dollars. Commissioned research papers and proposals will be presented at public events over the course of the next two years, including a kick-off event at the American Enterprise Institute in the fall.
In collaboration with The Institute for College Access and Success (TICAS) and its new Project on College Student Debt, the initiative will spotlight the burden of debt and build support for practical ways to address it. Advisors to the Project on College Student Debt include: Bridget Burns, a graduate student and member of the Oregon State Board of Higher Education; Theresa Fay-Bustillos, executive director of the Levi Strauss Foundation; Kevin A. Hassett, director of economic policy studies at the American Enterprise Institute; Charles E.M. Kolb, president of the Committee for Economic Development; Raymund Paredes, commissioner of higher education of the Texas Higher Education Coordinating Board; Ian Rowe, vice-president of strategic partnerships and public affairs at MTV Networks; and Blenda Wilson, president of the Nellie Mae Education Foundation.