Plan will extend the financial bailout to students with 1% student loans and other benefits
With college costs continuing to soar and more college graduates struggling to make their student loan payments, Rev. Jesse L. Jackson, Sr., president of the Rainbow PUSH Coalition, is urging lawmakers to extend the benefits of the federal bailout to these young people through adoption of the Rainbow PUSH Education Stimulus Plan. Joining Rev. Jackson in support of this initiative are Rev. Al Sharpton, President, National Action Network; Dr. Wayne Watson, Chancellor, City Colleges of Chicago; Gary Flowers, President and CEO, Black Leadership Forum; and John Brittain, Chief Counsel and Senior Deputy Director, Lawyers' Committee for Civil Rights Under Law.
The plan, which is designed to help college students and their families in this fragile economy, calls on Congress to:
• Reduce the interest rate on federally subsidized student loans to 1%.
If banks can be bailed out at 1%, then so should our students.
• Extend the grace period before loan repayment begins from 6 months to 18 months for students who graduate.
In tough economic times, it takes a college graduate an average of 6 months to 1 year to fine a job. The rules should reflect this reality.
• End the penalties assessed to schools for student loan defaults.
Schools should not be held accountable for students who don’t pay back their loans.
• Increase Pell Grants to $10,000 rather than the proposed $5,300 in the stimulus package currently under consideration.
The real cost of college and the impact of the current financial crisis both need to be reflected in the dollar value of Pell Grants.
Today, our nation’s largest banks, beneficiaries of bailout funds, are able to borrow money at an interest rate of less than 1%; but students are forced to borrow at 4% - 8%. Many young people are making their student loan payments with credit cards and paying 20% or more on that debt. They are putting their futures at risk.
Deepening the burden, when they miss payments, their credit scores sink, so they will pay higher interest on car or home loans (or not qualify at all). Yet, when the banks failed, their “creditworthiness” deteriorated, but they were granted billions in bailout funds.
So many talented students are discouraged from applying for college due to lack of money. Many in school cannot afford to stay. A number of colleges with small endowments are struggling to keep their doors open, including several historically black colleges. Students deserve the same terms and conditions as the banks. They should be afforded student loans at 1% interest. Students deserve to have their current loan rates renegotiated to lower and affordable levels.
Today, the average college student graduates with more than $20,000 in student loan debt and $3,000 of credit card debt. According to a report issued by the National Center for Public Policy and Higher Education, the cost of attending college has risen at nearly three times the rate of the cost of living. After being adjusted for inflation, college tuition and fees rose 439 percent from 1982 to 2007, far outpacing increases for medical care, housing and food. During this same period, median family income rose 147 percent.
The Rainbow PUSH Education Stimulus Plan will help students, their parents, and schools. It will contribute to our productivity and strengthen our consumer market. It will be a substantial benefit for the nation.
We need to move swiftly. Young people are our nation’s most valuable asset. An investment in them is an investment in everyone’s future. Education should not be postponed, delayed, or denied due to lack of access to affordable student loans. A student’s future is now, and so the government must also act NOW. We urge the new administration and Congress to pursue all avenues to implement this vision: use of existing TARP funds; inclusion of the 1% student loan program in the economic stimulus package being prepared; and through new legislation.
The Rainbow PUSH Coalition is a progressive organization devoted to protecting, defending and expanding civil rights to improve economic and educational opportunity. The organization is headquartered at 930 E. 50th St. in Chicago. To learn more, please visit www.rainbowpush.org or call (773) 373-3366. To arrange an interview with Rev. Jackson, please call the numbers listed above. -30