UDALL: Student debt drags down Colorado’s graduates, economy

Colorado is home to some of the best colleges and universities our nation has to offer. These schools give our students a running start to find good-paying jobs and a shot at making their own American Dream. However, students here — more than any previous generation — are encountering a monumental drag on their aspirations: student loan debt. In fact, student loan debt is one of the most serious challenges facing these Coloradans and our economy today.

Take, for instance, Denver resident Hannah, who received her bachelor’s degree in finance from the University of Colorado in 2012. She also graduated with nearly $60,000 in student loan debt at interest rates as high as 11 percent. Although Hannah quickly found a decent-paying, entry-level job and established a responsible plan to pay off her loans, it could take her decades to pay off her debt at the current rate. This burden will severely limit Hannah’s options to take risks like starting her own business, going back to school or buying her first home.

And it’s not just young people or new graduates who are saddled with debilitating debt. I recently received a letter from a concerned father in Littleton whose son is headed to college in the fall. Despite looking wealthy on paper, he and his wife live paycheck to paycheck paying off more than $250,000 of their own student loan debt. “How do I send my son to college?” he asks.

These anecdotes are not isolated cases. According to U.S. Department of Education estimates, more than 760,000 Coloradans carry student loan debt. And according to the Project on Student Debt, Colorado’s 2012 graduates owe an average of $24,540 in student loans — high enough to take a significant bite out of any entry- or mid-level salary.

This debt, which can carry interest rates as high as 14 percent, may be good for lenders and big banks, but it’s handicapping Colorado’s economy and siphoning money out of consumers’ pockets.

Debt and staggering monthly payments deter today’s graduates from becoming tomorrow’s home owners, business owners or entrepreneurs. Every dollar we save today’s youth is a dollar they can invest in what’s next — for them, their families and Colorado’s future.

At the root of this rising debt is the huge spike in tuition rates around the country in recent years.

What we need now is a multi-pronged effort that addresses the underlying drivers of tuition growth and also provides relief for students and graduates who are already or about to be saddled with debt. One step we can take in the right direction is passing the Bank on Students Emergency Loan Refinancing Act in Congress. This bill, which I’m proud to champion, is a common-sense way to give borrowers the option to refinance their loans at this year’s low rates: 3.86 percent for those with undergraduate debt and 5.41 percent for graduate programs.

The Congressional Budget Office found that this straightforward proposal would save students thousands of dollars over the lifetime of their loans. For example, an undergraduate with $30,000 of student loan debt at 6.8 percent with a monthly payment of $345 would save more than $4,272 in interest over the lifetime of the loan. That’s not just spare change.

And this fiscally responsible, student-friendly idea would not cost taxpayers a dime. The bill would be fully paid for by enacting the “Buffett Rule,” which would ensure that billionaires are not paying lower tax rates than their secretaries.

Our nation’s leadership in the 21st century and beyond requires a skilled and educated workforce that can create and innovate — but Coloradans can’t soar if they’re weighed down by debt. There is no stronger investment we can make in our country’s long-term economic competitiveness than to ensure that all Coloradans have access to an affordable and quality education.

Mark Udall is Colorado’s senior U.S. senator.