It wasn't an economic disaster. We didn't lose our jobs. But my husband and I have gone through all of our non-retirement savings in this past year.
Where did it go? We spent $35,000 on our daughter's first year of college. And that was after help from financial aid.
We are not alone. Millions of families face the economic struggle of paying for college. And graduates -- many of them newly minted this weekend -- walk off the stage with their diploma and with more debt than ever before.
Earlier this month, many families marked a different kind of milestone:
May 1 was the deadline for filing the FAFSA (the Free Application for Federal Student Aid). The FAFSA determines student eligibility for federal aid and forms the basis from which colleges make their financial aid decisions. For college students and their parents, these recommendations have tremendous economic consequences, affecting how much they will pay for college out of pocket and how much they can and will need to borrow.
But the stakes may get even higher if our elected officials continue to use student loans as the pawn in their election year battles, and if they allow the interest rate on federal loans to double from 3.4 percent to 6.8 percent on July 1. While members of both parties generally appear to support the subsidies (with some notable exceptions, including Congressman Todd Akin, who likened federal support of student loans to "stage three cancer of socialism"), they are fighting over how to pay for it. Unless they come to an agreement, we all lose out.
College students are already facing skyrocketing college debt, borrowing twice as much than just a decade ago. In 2010, students graduated from college with an average debt topping $25,000, an all-time high. Collectively, outstanding student loan debt exceeded $1 trillion in November, setting another all-time high.
Raising the interest rates on student loans could not come at a worse time. Young people graduating from college face tough job prospects, with many unable to find a job and unable to pay back the debt they have acquired. Piling on even more debt is likely to raise default rates and make it more difficult for today's generation to get a solid financial footing.
Moreover, parents are not in an economic position to foot more of the bill. The bursting of the housing bubble closed one often-used avenue for helping pay for children's education -- drawing upon home equity. Parents these days not only have less home equity, many now find themselves with upside-down home equity, owing more than their house is worth. Others lost their homes in the foreclosure crisis.
The situation is especially dire in communities of color where the economic crisis cost the average Latino family two-thirds of their wealth and the average black and Asian families more than one-half of their wealth between 2005 and 2009. (In comparison, the average white family lost 16 percent of their wealth.)
While some may believe that the government cannot afford to help invest in the higher education of its citizens, we can't afford not to. The Bureau of Labor Statistics estimates that jobs requiring some type of post-secondary education will grow the fastest during the 2010-20 decade. The highest growth (22 percent) is expected to be in jobs requiring a master's degree, followed by a doctoral or professional degree (20 percent).
Without people to fill these jobs, we risk falling behind other nations, especially in the fast-growing science, technology, and engineering fields that drive innovation and technological change. Without investing in students in these areas, we face a severe labor shortage in these critical jobs. The National Academy of Sciences reports that in order to stay economically competitive, we need to educate more people in these critical areas and tap the talents of communities, such as women and minority students, who are historically less likely to enter these fields. Raising the rates on federal student loans will only discourage many of the students that our nation's economic future depends on.
While our nation needs to be fiscally responsible, we should not do so on the backs of the poor and the middle class. The $6 billion to extend the student loan subsidies pales in comparison to the tax breaks we afford to wealthy households. The lower tax rates on long-term capital gains, for example, that disproportionately benefit very wealthy households, cost the government almost $403 billion between 2010 and 2014. While some argue that these tax breaks help keep people investing in companies and drives economic growth, without people to fill these jobs (most of which require at least some college), our country will not be able to remain competitive.
We need to let our elected officials know that they should not let the federal student loan subsidies expire. We are counting on them to recognize that our nation's future is at stake.