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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Sep 19, 2012

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The Presidential Election is less than two months away. President Obama and Vice President Biden are facing off against Republican nominee Mitt Romney and his running mate Paul Ryan amid a weak economy, an unpopular war, rising global unrest, the Arab Spring, Civil War in Syria, and numerous Anti-US protests.

While these large issues may weigh heavily on the minds of many Americans, more intimate issues such as personal finances and college debt may prove just as influential in this election season.

The upcoming election may very well be decided by student voters— the very same voters who showed up in support of President Obama four years ago. Perhaps President Obama’s campaign rallying cry of “Change” and “Hope” truly did gather young voters to his proverbial banner. Regardless, the massive number of young adult votes for President Obama in the 2008 election showed that young people are indeed capable of coming out to vote in droves.

This year is both similar and different from 2008. War in Afghanistan continues to rage on and the economy remains weak with unemployment levels still high. The Occupy Wall Street Movement celebrates its second year of existence having achieved little in recent months, aside from fizzling out of the national spotlight.

Private and federal student loans, on the other hand, have taken center stage in the minds of many young voters. Now that college debt has soared past $1 trillion, this newly-realized problem may be one of the most influential deciding factors in this upcoming election.

From Crisis to Crisis

The financial crisis began in 2007. As the economy fell into the recession, many student loan borrowers were forced to defer their student debt again and again. Now, having exhausted deferment options, many private and federal student loan borrowers have instead defaulted and seen their debt increase due to penalties and compounding interest.

With little sign of economic improvement, these voters—current students, recent graduates, and older adults who took out student loans for their children or themselves—will no-doubt take the time to vote for their favorite presidential candidate. The specific policies of each candidate may decide how this sizable block of voters casts their votes.

The Differences

The “Ryan Budget,” crafted by Vice Presidential candidate Paul Ryan and vocally supported by Presidential candidate Mitt Romney, would lower the income level at which students qualify for grants, allowing low-income earners to obtain the chance at an education. It would also create a maximum income for eligibility, cutting off applicants who earn above a certain income level. The plan would limit a grant’s total to $5,550, and make part-time students ineligible. The “Ryan Budget” would also reduce the Pell grant program which allows funding for every qualified student and it would eliminate more than 1 million existing Pell grants according to the Center for American Progress Action Fund.

Perhaps even more worrisome to borrowers would be Romney’s plan to hand over the federal student loan program to private banks. Once in the hands of the private sector, interest rates would likely rise. Few students would feel comfortable having their loan interest rates controlled by the very banks that caused the financial crisis as well as the very banks that took billions of taxpayer dollars in the government-induced bail-out.

In contrast to this, President Obama’s plan would allow increases for grant maximums that take into account inflation and rising tuition costs. Unfortunately, President Obama has also eliminated certain Stafford federal student loan benefits for graduate students.

Former President Bill Clinton, who spoke on behalf of President Obama at the Democratic National Convention, curried favor with the nation’s young adults in a Miami college address by saying, “Starting in 2013, every student who borrows money under the federal student loan program, however much you borrow, will be able to pay that loan back for up to 20 years for a small fixed percentage of your income.”

Following 20 years of steady payments, a borrower’s student loans would be forgiven under these new rules.

Despite Obama being supported by a large number of young adults, Amanda Henneberg, a Romney campaign spokesperson said in a Huffington Post interview that, “Under President Obama, the costs of college have skyrocketed—making it more difficult for students to attend college—and his economic policies have made it harder for graduates to get jobs.”

While Democratic supporters may counter in response that “even a broken clock is right twice a day,” college debt did rise past $1 trillion during the four years Obama has been President and the economy has showed minimal—if any—improvement for job seekers.

Considering how different the two student loan policies of Romney and Obama are, Clinton’s statement that “this will change the future for young Americans” is quite accurate. In fact, the only thing both candidates seemed to agree on thus far was that the discounted interest rate on subsidized federal student loans should remain at 3.4 percent.

Voters with private and federal student loan debt may have a very simple voting decision come Nov. 6.