- When the USSR launched the first satellite, Sputnik, into orbit, the United States feared it was lagging behind.
- Eisenhower responded by creating a program to help more people in college afford it – and to promote America.
- While it was created to further educational equality, the student loan program now extends the debt further.
Sputnik was a wake-up call for the United States: Americans need to be careful.
On October 4, 1957, the Soviet Union launched the first orbiting satellite, Sputnik. This was a clear signal to President Dwight Eisenhower that the United States needed to produce more scientists and engineers to compete with other nations. But there was a problem – the education system was special at the time and low- and middle-income people were barred from participating.
The United States will not compete with the Soviet Union in the “space race” as far as this is concerned.
Congress stepped in and, at Eisenhower’s request, enacted the National Defense Education Act (NDEA), which allowed the government to lend to students in science and math. It was later amended to remove restrictions on study areas.
In other words, Sputnik encouraged the creation of the Federal Student Loan Program, as detailed in a new book, The Debt Trap, by Wall Street Journal reporter Josh Mitchell.
“It is no exaggeration to say that America’s progress in many areas of effort in the years to come – indeed, the survival of our independent nation – will depend on the education we provide to our youth.” The report recommends the passage of the bill.
President London B. Johnson stated in his 1964 remarks that more than 600,000 additional students had access to education through the NDEA’s student loan program. But there is still much to be done to tackle affordability, Johnson said, adding that Americans are spending $ 4,000 to $ 5,000 on each child’s college.
Johnson added, “Now, ladies and gentlemen, this should not just continue.” “The challenge is clear and we must meet it. Excessive spending should not be excluded from access to higher education.”
Today, the average out-of-state annual tuition for a public university is $ 15,000, with fewer and fewer people enrolling in college as the country’s student debt burden is $ 1.7 trillion and growing. What started out as a pious educational pursuit has now become a complete crisis.
The government’s involvement in American education is hurting those who wanted to help it.
Johnson, known for his fight against poverty, expanded the education system in an effort to give everyone in college a fair shot – a cornerstone of the American dream. To achieve its goal of universal access to education, it signed the Higher Education Act of 1965, which guaranteed loans to the middle class.
But after the passage of the Act, banks started raising interest rates on student loans and the system passed on to the for-profit lenders while the borrowers accumulated more. Colleges continued to increase tuition as more federal aid became available. This created a network for students across the country, as Mitchell points out: the more colleges increased tuition, the more Americans had to borrow, and the more Americans borrowed, the more colleges increased tuition. ۔
Ellis Revlin, head of Congress’ first budget office tasked with developing Johnson’s student loan program, told Mitchell in 2019 that the idea behind federal debt was to “get higher education into your future income.” And so financing the loan was a sensible thing. You can pay it off. It’s a refund of your future income. “
But looking back, when asked what she thought of the debt industry, Revlin told Mitchell: “We’ve got a monster out.”
The average American student has about ,000 32,000 in debt after graduation. Due to high interest rates, if the borrower does not earn enough, it is very difficult and sometimes impossible for the borrower to repay the actual loan amount.
David Wise, 59, for example, originally borrowed $ 79,000 from a student, paid 175,000 out of it, and still owes $ 236,485.
“I feel like I’m actually responsible, and I’ve paid off a lot of my student loans,” Wise told Insider. “But it’s really a debtor’s prison.”
This is even worse for parents who want to give their children a chance at higher education. Parent Plus Loans are federal loans that parents can take to finance their children’s education, and this loan can cover the cost of attendance and is not income based.
It has developed a system of unsecured borrowing, and with PLUS loans with the highest interest rate of 6.28%, parents often get stuck in debt repayment for the rest of their lives just because they want the best for their children. Wanted to give the future.
President Joe Biden has taken steps to address the student debt crisis. It has begun reforming student loan waiver programs that have failed in recent years for borrowers, as was the case with government employees, and has allowed students to pass free community colleges during their tenure. Promised to significantly reduce the college’s affordability.
But despite these reforms, 45 million Americans continue to bear the brunt of the debt that many Americans dreamed of, Eisenhower and Johnson said.