Welch listens to students’ debt concerns

Rep. Peter Welch hears from Leahn Bass about student debt. Bass has about $20,000 in federal student loans.
Rep. Peter Welch hears from Leahn Bass about student debt. Bass has about $20,000 in federal student loans. VTD/Taylor Dobbs

Rep. Peter Welch, D-Vt., was at the University of Vermont today, but he wasn’t making any speeches. Instead, Welch was all ears as students told him about their financial situations, debt and jobs.

Students will face another financial hurdle on July 1, when the interest rate on federally subsidized Stafford loans is set to double from 3.4 percent to 6.8 percent.

According to U.S. Department of Education projections, 21,007 students in Vermont will take out $78,775,944 in Stafford loans. Nationwide, more than 9 million students are projected to take out $31.6 billion in Stafford loans.

Welch heard from about 15 students in a wide range of financial situations during an hour-long visit at UVM’s Davis Center.

Julian Golfarini, a 23-year-old senior at UVM, said he feels lucky because he doesn’t face any debt when he graduates next month. He said the fact that he is debt-free doesn’t mean the system is working. Golfarini, UVM’s former student body president, attended a conference in Washington, D.C., this spring with 100 other student body presidents from around the country, and he said tuition costs and student debt were “issue number one” at the conference.

“You’re punishing the wrong people in the students,” Golfarini said.

Leahn Bass is a junior at UVM majoring in social work. Unlike Golafarini, she does have debt – about $20,000 of which comes in the form of federal loans like the Stafford loan. The 25-year-old works full time in social work as she continues her studies as a full-time student at UVM. The income helps pay for her education and support her and her 5-year-old son.

Welch’s focus as he collects stories like Bass’ is the July 1 interest rate hike, but he is also taking a look at the economics of higher education at large. His sentiments echoed President Barack Obama’s remarks in this year’s state of the union address, when he said tuition increases are also to blame for the more than $1 trillion of student debt in the U.S.

Welch said that in addition to government regulations, university administrators were responsible for keeping their tuition in check.

“We’ve got to look to the administrations of the schools to find creative ways to keep those tuition increases at or below the inflation rate,” Welch said.

Gavin Caster, a 21-year-old majoring in economics at UVM, said the solutions didn’t even necessarily have to be creative.

“It wouldn’t even have to be a creative process,” he said. “It would just have to be a more intellectually and rigorously honest process” of looking through school’s budget and taking time to examine if certain increases were really necessary.

Part of the problem, Caster said, is that loans are currently subject to market trends, with private corporations holding the loans and therefore controlling students’ financial situations. He suggested isolating the loans from market pressures, keeping the rates low, and – perhaps most importantly – reducing the overall use of loans to pay for college.

“If you isolate loans and reduce them,” he said, “you’ll inherently control tuition.”

While there was a consensus today at UVM, the issue in Washington is divisive. Welch said he was happy to see the House of Representatives pass legislation that would prevent the interest hike, but that it was hard to see it as a win since the GOP-backed legislation makes up the difference using money currently designated for health care. Democrats would like to see the money steered from subsidies to oil companies. Welch said there might be another way.

“My preference would be that we work together on the larger question of college affordability. Not pitting health care and oil company subsidies against each other,” he said. “The big issue is: Are there some ways we can pay for this by easing regulatory burdens, by providing incentives for college administration to find ways to lower tuition increases?”

Welch said he is determined to get an agreed-to piece of legislation through before July 1, and he plans to use the stories collected at UVM today and on his website to make his points on the floor in Washington.

While the details are still uncertain, Welch said his ultimate goal is to keep students in school, and to make sure as many as possible could pay for an education.

“The broad question here is college affordability,” Welch said.

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Taylor Dobbs

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  • Working for the US Dept of Education last year, I encountered high officials who expressed astonishment at the disconnect between Federal influence on public education and on higher ed. Federal influence on public schools is purchased at less than ten cents on the dollar. Looking at the influence of IDEA, NCLB, RTT, SIG and now NCLB waivers, to name a few, the Feds leverage relatively small amounts of money for big returns.

    By contrast, the federal student loan programs run by ED literally bankroll the higher ed enterprise, yet the Feds have little influence on substantive policy in higher ed, including matters like cost control, and accountability for results. This is illustrated by the way legislation designed to target predatory for-profit colleges was gutted in Congress, after a vigorous lobbying effort.

    Of course higher ed has something to offer policy makers that public ed lacks – sinecures. The revolving door world of education policy is as insidious as that of defense policy. If you were a policy maker, would you rather have your next job at a university sponsored think tank, or perhaps as a professor, or in a third grade classroom? I’m skeptical of the prospects for meaningful higher ed reform in the context of this endemic soft corruption.

    So with no meaningful prospects for accountability from universities and colleges, where does accountability fall? Squarely on the shoulders of individuals, in the form of student loans which cannot be discharged by bankruptcy. Cost control in higher ed may only be achievable by making student loans subject to bankruptcy again, so some of the risks of the system are again borne by the institutional players who milk the system.

    I found it instructive to read “What the U.S. can’t learn from Finland about ed reform” by By Pasi Sahlberg on the WaPo Answer Sheet ( He wrote:

    “In the United States, education is mostly viewed as a private effort leading to individual good….By contrast, in Finland, education is viewed primarily as a public effort serving a public purpose.”

    In Finland P-12 AND higher ed is free to all residents.

    The caveat emptor philosophy of higher ed funding we have in this country has saddled our most educated and ambitious citizens with a trillion dollar ball and chain which is dragging down our economy. Had the same money that was poured into trickle down corporate bailouts been injected into the bottom of the economy as an investment in the middle class, we might have seen some real economic recovery.

    30 years of bitter experience has shown us that trickle down is a vast boondoggle for the well connected. It’s time to try some trickle up economics.

  • Jim Christiansen

    Please stop with the Finland social comparison. 5.5 million homogenous white folks cannot be extrapolated to the US in any useful way.

  • Johnnie Goldfish

    All of the politicians are on the dole anyway. I suggested to our fine representatives that we have a 3% cap on all loans for students, guess what, none replied.
    The USA needs a new party and a heck of alot more stimulus.

  • @Jim, actually if you read the article I referenced, that’s pretty much what it says: the Finnish educational system is so wrapped around their welfare state that attempts to imitate then in our culture will be distortions.

    Finland or no Finland, I think it is important for us to be reminded from time to time that education is a fundamental public good, and that the benefits do flow to society as a whole and not just to rugged individuals. A rising sea lifts all boats, as JFK said….

    Here’s another interesting take from Fox: Not saying I agree, but multiple perspectives on a problem are always interesting. I love the line “Lather, rinse, repeat.”

  • Walter Carpenter

    “30 years of bitter experience has shown us that trickle down is a vast boondoggle for the well connected.”

    The same people that have convinced us about trickle down economics love it when a student that is $50,000-$100,000 in debt applies to them for a job. Then they can control them through fear of losing the job, just like they do with health care. We could do single-payer tomorrow if we wanted to, but the corporations would then lose the leverage of fear that they now have over their staff.

    • Walter, when education because a matter of private rather than public good, “smart” people rush off to work for Wall Street and learn to foreclose on widows and orphans to pay those loans. You hit the nail on the head. We have a system that is perfectly designed for the results we are getting: fear and greed.

  • Kel Varnsen

    It seems the whole country has been brainwashed into believing anyone who does not complete 4 years of college is a failure. This has been perpetuated by colleges and high school guidance counselors who will never be criticized for putting kids on the college path. The fact is that we have a shortage of tradespeople, and the trades are well-paying, respectable vocations. Not every kid is suited for college, but that doesn’t stop colleges from trying to collect from them. If you want more insight read a book called “Shop Class As Soul Craft.”

    These kids in the stories are not victims of their debt. No one forced them to take the loans, and whining to their Congressman about the debt is silly. It seems Congress’ and Obama’s entitlement mentality is rubbing off on college students now.