Student loan debt still a crippling burden for millions in US

WASHINGTON: Michael Bloomberg’s record US$1.8bil (RM7.5bil) donation for financial aid to Johns Hopkins University highlights the problem of student debt in America, which can still be a burden even years after graduation.

According to the Department of Education, 42.2 million Americans were repaying a federal student loan at the end of June 2018 for a total sum of nearly US$1.5 trillion (RM6.3 trillion), the largest volume of debt after home loans.

Bloomberg, the former mayor of New York, said he was making the gift to his alma mater to help qualified low- and middle-income students more easily afford access to university in a country where post-secondary education fees at elite schools routinely exceed US$50,000 (RM209,000) a year, a prohibitive barrier for most families.

”I was lucky: My father was a bookkeeper who never made more than US$6,000 (RM25,000) a year. But I was able to afford Johns Hopkins University through a National Defense student loan and by holding down a job on campus,” Bloomberg, who also founded the financial news service of the same name, wrote in a New York Times op-ed.

The donation, believed to be the biggest ever to a university, “will ensure that we are able to recruit more first-generation and low-income students and provide them with full access to every dimension of the Johns Hopkins experience,” its head Ronald Daniels said.

Currently, 44% of students at the institution in Baltimore, Maryland, complete their studies in debt, on average owing more than US$24,000 (RM100,445), university data shows.

For Sandy Baum, a university professor at the Urban Institute, Bloomberg’s gift is “great” but “that’s just a drop in the ocean”.

His move would have had a bigger impact if he gave money to improve the quality of education for more students, in less elite private or public institutions, she said.

Baum is not opposed to student loans because for most students, the choice becomes not going to university or borrowing to go.

Most students’ loans, she says, amount to between US$15,000 and US$20,000 (RM62,780 and RM83,700) but getting US$40,000 (RM167,410) in debt is not unusual for a bachelor’s degree (four years of study).

The College Board estimates the average cost of a four-year course in a private university at US$34,740 (RM145,495), not counting additional accommodation and living expenses.