Why the Fiscal Cliff Could Worsen Student Debt
As Congress and President Obama continue talks to find a deal on the fiscal cliff, a package of tax hikes and automatic spending cuts that will take effect in January if Congress doesn't act, millions of Americans are facing another burden: rising student debt.
At the heart of the fiscal cliff debate is the question of how best to grow the economy and strengthen the middle class. What better way to achieve these two goals than making higher education more affordable and student loans less necessary?
Student debt, which now exceeds $1 trillion in the United States, impacts more and more college students and their families every year, as our recent report, "The Student Debt Crisis," shows.
Our report points out that the cost of attaining a college degree has increased more than 1,000 percent over the past 30 years. This has forced a growing number students and families to rely on loans to afford an advanced degree.
Failing to reach a deal before the end of the year would worsen this trend because of higher taxes on already struggling middle class families.
According to the Washington Post:
“Unless Congress acts by the end of the year, more than 26 million households will for the first time face the [Alternative Minimum Tax (AMT)], which threatens to tack $3,700, on average, onto taxpayers’ bills for the current tax year. Because those people have never paid the AMT, they have no idea they are in its crosshairs.”
Education funding and federal student aid could also be cut as a result of the sequestration—across the board budget cuts of about 8 percent—that will accompany the fiscal cliff. Pell Grants, federal student loans, and college tax credits could all take a hit at the end of the year.
This is a serious issue that impacts a whole generation of Americans, and lawmakers must keep them in mind when making decisions regarding our nation’s future. Voters sent elected officials a clear message on Nov. 6, when nearly half of all voters sided with President Obama, who campaigned fervently on the concept that taxes should be increased on those earning more than $250,000.
Young people are watching to see if Congress will, as President Obama put it, “reflect the will of the people.” The future success of Millennials and the rest of the country depends on it.
Abraham White is a communications associate at Campus Progress. Follow him on Twitter @abwhite7.
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