The Student-Loan Rate Impasse—or, At One Point Does an Impasse Make a Crisis Significantly Worse?


Much attention has been paid to the ballooning accumulation of student debt and its short- and long-term impact on the U.S. economy. As a response to the Great Recession, most states dramatically reduced their subsidies supporting public colleges and universities over a series of annual budgets. In the last year or two, some states have moved to restore some of that funding. But, nationwide, the net result has changed very little. Students continue to pay much higher tuition than they would have paid even six or seven years ago. Because grant programs have not expanded significantly—and certainly not enough to cover the dramatic increases in tuition—students have had to rely much more on loans.

In fall 2012, total student debt exceeded $1 trillion, and the total is now increasing by more than $100 billion per year. Among students who have had to take student loans—now about 60% of all students…

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