Solutions to dealing with the student loan debt in America
Student debt is a problem in America and a solution is needed. It is a problem because the amount of debt incurred by folks going to college is not balanced with the demand for labor and the income offered by employment opportunities that would allow many with those debts to work it off. That, and the shear nature of the unfair repayment terms of the debt make the current circumstances of student loan debt a problem that needs to be tackled. At $1.5 trillion dollars, student debt is now growing toward the equivalent of 10% of our total national debt of $20+ trillion (https://www.forbes.com/sites/zackfriedman/2019/02/25/student-loan-debt-statistics-2019/#254085f6133f).
Folks, as a fiscally responsible person who only had myself to depend on throughout life, financial accountability has always rested on my shoulders. I went to college, I took out student loans, I worked hard at jobs to pay them all back, stayed up late when I had too, and skipped a semester here and there to make enough money to pay tuition and fees. And, I made calculated decisions along the way that assessed the cost / benefit ratio of assuming more debt for alternative career paths. It is a reality that we are constrained by the financial circumstances we face. And, we burden ourselves both as individuals and as a nation, to our peril, if we take on more debt than we can manage.
I recall having been accepted and subsequently matriculated into Syracuse University Law School in the early 90s. I was very motivated and wanted to pursue this career path. But, I wrestled with it. I wrestled with the mountain of debt I would have had to absorb and pay back. I wrestled with the sacrifices my young family and kids would have had to pay for the decision to attend. In the end, I did not go. The cost / benefit for me, given other viable options, simply did not make sense. This is the same analysis any college student must be accountable for.
Some people want to see the government simply forgive student debt because so many have burdened themselves with so much that they cannot get ahead in life. This is a real problem and one that needs to be addressed. I would like to see more done socially and in our schools to educate students on the perils of debt – or modern day slavery as I call it. But forgiving loans alone is a slippery slope that does not offer real solutions. Sure, it is a good political campaign bumper sticker to give out free money to obtain votes, but not a helpful solution. Somebody always pays for forgiven debt – most often that person is YOU, the tax payer.
Still, our leaders need to offer solutions to yet another social dilemma that’s gotten out of control. Here’s where I stand:
I. Get rid of restrictions on student loans that prohibit refinancing to a lower interest rate, and penalties for early payoffs. The providers of the loan contracts should not be entitled to take advantage of borrowers in this way - who thought that was a good idea? Lenders should be entitled to their principal and the agreed to interest rate. If a borrow wants to obtain better loan terns elsewhere, and pay off their obligation early without penalty, they should be free to do that. Loans that prohibit such options should be outlawed entirely.
II. Provide avenues for those who are in debt to work it off - not simply forgive it. There are many approaches to making this happen. I like the idea of leveraging programs such as military service, or public service, as components of the solution. For example, the post 9/11 GI Bill has encouraged people to perform military duty and when done with their military obligation, their college is covered as long as they pass their courses. I also like getting kids in college at 16 to get two years of college, or marketable trade school, already completed before High School graduation. I like the idea of leveraging those who are in student debt to work in programs that benefit the communities and society good in a vast number of areas such as care for the elderly, support to the healthcare industry, and tutoring / mentoring younger grade school students who are struggling in school. There are so many ways to confront this problem, we just need to do it. However, I don’t like the argument that an educated population outweighs the cost of the investment in their education. I believe people should own their decisions and their investments in education.
The fee concept being kicked around by some Congressional leaders whereby charging Wall Street a fee for trading in stocks, bonds, and other investment and securities has some merit, but it is a slippery slope and I don’t like it. Taking a government bite from each Wall Street business transaction – say $.50 for each $100.00 worth of transactions (i.e .5%) may not seem like a lot, but it is another hidden cost that will be all too attractive and tempting for law makers to continually tack more on to. I don’t think the answer to student debt dilemmas is to take money from others.
III. I prefer an approach proposed by the Utah Bull Moose Party. IRR (Innovation, Resiliency, and Regulation – that is, “Intelligent Regulation”). I want legislators to focus their energy on measures that grow the American economy and shrink the debt. This approach will provide more good paying jobs that make America healthier, expand the tax base, reduce our debt and afford student loan takers the opportunity to get good paying jobs to make their loan payments. Yes, this takes immense creativity, boldness and leadership, but it can be done.
IV. Demand reform of the 2007 Public Service Loan Forgiveness Program already put in place by Congress, and fire Representative Robert C. Scott, Democrat of Virginia - chairman of the House Education Committee. Less than 1% of those who take advantage of this program “already in place solution” actually benefit from it because of egregious mismanagement. Congressmen/women, fix what you have, do you job! Voters, fire your incumbents regardless of party for not getting the job done!
In summary, borrowers must take responsibility for their debts – especially college bound students who are supposed to be thinkers and better prepared to manage their fiscal circumstances. For the majority, they must be held accountable for the debts they incur. Congress can help too. As mentioned above, avenues to work down and restructure debt terms can be instituted. And, Congress can focus their energy on growing our economy and the opportunities that permit borrowers a better opportunity to relieve themselves of the debt they have saddled themselves with.
As I write this, I am preparing to see my daughter graduate from nursing school next week. Though we come from poor financial roots, where we have always had to make our own way, she will graduate debt free with a great job offer - from a hospital institution that will also pay for her continuing education tuition. She has worked hard, and her family has helped her stay out of debt too. She has behaved fiscally responsibly – fingers crossed that this behavior continues. Folks, this can be done and there are intelligent alternatives that even now exist. But, accountability for the decisions you make and not becoming a victim of debt is a “decision” we all make and must take some accountability for.