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CPA Scott Adair discusses college affordability

CPA Scott Adair discussed efforts to keep college financially within reach for students and parents Monday on News 8 at Sunrise.
CPA Scott Adair discussed efforts to keep college financially within reach for students and parents Monday on News 8 at Sunrise.

Adair said the new law recently passed in Washington will make students loans more affordable in the short term, but not necessarily in the long term.

Current student loan debt is estimated at $1.2 trillion, topping credit card debt as the top form of consumer debt across the nation.  "It's kind of shocking to a lot of us when we stop and think about it, but when you think about the cost of college tuition these days and at these rates it certainly is troubling," he said.

Under the new law, rates for new loans will now be tied to current market rates for 10-year treasury bonds.  This year the rate for undergraduate Stafford loans is 3.86 percent and plus loans (those often taken out by parents for their children) will be 6.41 percent.  A rate cap that could be charged is 10.5 percent.

If rates rise, as they are expected to in the next couple of years, today's 13 year old will take on added debt when they go off to college.  The federal government is expected to take in more than $184 billion in student loan profit over the next 10 years.  The money is to be applied to deficit reduction.

The White House and College Board say the cost of tuition and fees at a four-year state university has more than tripled in the last 30 years.  Over that same time, the income of a typical middle class family has only risen 7 percent.  That's a major reason for the increase in student borrowing.

During his upstate tour last week, President Obama offered several proposals for making college more affordable, including linking federal aid for schools to graduation rates.  Adair said that could help, but families also need to being college planning early, and consider taking advantage of the New York State's 529 college savings plan.
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