Senator Mark Warner spoke to VCU students on Wednesday and addressed the issue of student loans debt by outlining his plan to alleviate some of the growing crisis if he is re-elected to Congress this November.
Warner referred to student loan debt as potentially the “next financial crisis that this country will confront.” Student loan debt is now larger than credit card debt , which could be “potentially crushing a whole generation’s opportunities”
One plan he supports is The Dynamic Student Loan Repayment Act, also known as Income Based Payment. This option would automatically sync a persons student loan debt payment with their level of income. The payment would increase as a person’s income level increased and would be capped at 10% of income. There is a currently an option available, but Warner hopes to simplify the process and make it the first choice for anyone graduating.
Another idea Warner has is to have an employee option to add take $5,000 a year of salary pre-tax per year and have it be paid toward student debt. Warner admits this is not a full solution, it could be an effective tool in many cases.
One of his primary plans to prevent students from acquiring debt in the first place is is a bill he is writing with Florida Senator Marco Rubio (R) titled “ The Student Right to Know Before You Go Act.” This bill would comprise data from all universities, colleges, community colleges and career and technical institutions and put all financial data on one easy to use website. This website would assist in answering questions such as graduation rates, tuition costs, job markets by major and average salary.
Warner argues that being able to easily compare data would help students and their families make better financial decisions and therefore take on less student debt.
“Lets make consumers better informed before they make higher education costs and choices,” Warner asserted.
Warner was clear about the magnitude of paying for college education.
“Higher education,” he said. “Next to buying a house is probably the most expensive item you’ll purchase in your lifetime.”
Senator Warner contended that one way to save money is taking higher education classes in high school and community colleges before university. In these instances students receive credit toward your degree for taking them without having to take out student loans. He feels that high schoolers could earn an entire semester’s worth of credit and therefore save money that otherwise would have been spent on tuition. Warner also is in favor of making Pell Grants available to qualified high school students.
“If we make the entry path to higher education not just the traditional route, but through a different route as an entry, could put dramatic pressure on lowering the cost of higher education,” Warner said.
However, given the current state of the economy, getting funding for new bills will be difficult. This gathering took place less than a week after VCU President Michael Rao announced that VCU will need to make budget cuts . On August 28 Rao announced VCU would need to cut 5% for the current fiscal year and 7 percent for the next year.
Students should not expect a mid year tuition increase according to Pamela Currey, the Associate Vice President of Finance and Administration .
“I cannot speak and do not for the President,” she said. “But I don’t see anything that they would suggest that that would be something that they would consider a mid-year tuition hike.”
That will not be necessary because the VCU Board of Visitors built in contingency funds for emergency situations.
Warner felt that the reason for these cuts can be traced nationally some of the blame had to do with partisan politics in Washington. The fiscal year is ending at the end of the month, and if agreements on entitlements and taxes are not reached between Republican and Democrats than there could be potentially be sequestration, which he referred to as, “stupidity on steroids”.
If there are no agreements are reached, “ you’re gonna see even greater cuts in education going forward. Theres just no way around it,” Warner projected.
Currey had a similarly grim forecast for Virginia.
“Interestingly, the is nation not in a recession , and this is first time that Virginia revenue have gone down when the nation isn’t in a recession , Currey said. “That’s a little worrisome.”
VCU is in the process of creating a new budget. Currey explained that the process will be, “a fundamental soup to nuts basement to attic review of how we are spending our money and how were allocating it.”
Once completed VCU will then run the new model simultaneous with old one to test it, and the final new budget might be complete by July 1, 2016 the new one has to be out.
Warner suggested students have to do their part as well when it comes to students debt debate, despite the budget cuts impacting the ability of students to afford loans,.
“I get the fact that people are turned off by politics at this point, but if you tune it off, all your doing is turning the keys over to the extremists…If young people voted in percentages that they represent in society this would be a much higher priority issue,” he said
“You shouldn’t go broke going to college in America and that is unfortunately starting to happen,” Warner stated.