A Bloomberg article on “Record Student-Loan Debt Prompts Treasury Push to Stem Defaults” on July 24 quoted Dr. Richard Vedder, Director of the Center for College Affordability and Productivity and Professor Emeritus of Economics at Ohio University.
The U.S. Treasury, which finances more than 90 percent of new student loans, is exploring ways to make repayment more affordable as defaults by almost 7 million Americans and other strapped borrowers restrain economic growth….
“The income-based plans provide borrowers with good options to keep their loans current, and keeping those loans current is very important from the perspective of the U.S. government’s balance sheet,” Raskin, the Treasury’s highest-ranking woman ever, said in the July 16 interview. “We need precision around how much we have to raise in order to meet the demand for student loans.”
Critics such as Richard Vedder, director of the Washington-based Center for College Affordability and Productivity, a nonprofit research group, say the administration’s efforts fail to address the core issue: education costs increasing faster than inflation and income.
The income-based repayment programs don’t encourage people to seek higher-paying jobs or major in the fields that lead to better salaries, Vedder said. The administration’s measures will alleviate “some of the problems that currently exist with the system, but will actually worsen things in the long run.”
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