In my last post, I when I discussed the policy of free college I briefly mentioned the United States’ student debt issues. In this post, I’m going to explore the debt crisis — how we’ve gotten here and what we can do to get ourselves out.
Americans face over $1.6 trillion in student loans. 58% of all graduates have student debt. It comes as no surprise that 57% of millennials (under 30) view student debt as one of the most major problems afflicting young people.
In short, the sheer quantity of student loans is due to the necessity of college. An education is almost always vital for social mobility, or maybe in general to have a comfortable lifestyle. And since the government supports young people’s pursuit of education, it sponsors federal loans so that people can live their college dreams. The unintended result of this policy is that tuition has skyrocketed. College registrar’s have realized that people are able and willing to pay because of government backed loans and have increased their tuition to reflect this increase in demand. And these tuition increases only push up the necessity of loans, creating a snowball effect that is not in the interests of college students or paying parents.
Our student crisis must be fixed one way or the other. It’s in our best interest to support education. One solution could be and employer-employee partnership to pay off student loans, similar to how retirement accounts work. Employer’s could possibly match a certain percentage that the employee is paying, and these contributions could be made tax exempt to encourage the payments.
I personally support reform, but many don’t see a student loan problem, much less a crisis. Less than 10% of student loans are paid late, leading people to not find issue with the status quo. This analysis ignores the possibility that onerous loans could be delaying a nation’s ambition to buy houses or start a family or invest. Other people view the loan situation as a personal issue and not a national one that demands reform. They argue that people have a responsibility to fix what they signed themselves into or that they should’ve studied something lucrative. After all, only 8% of people have loans over $100,000. I do think loans (of any type) need to be repaid in some way, but I don’t believe people should be left to their own. Debt is scary, and it’s much easier to get yourself stuck than to pull yourself out.
The money behind college needs a total overhaul. One simple reform that is past due is better bookkeeping. Students should have the right to know exactly where their money is going. According to former Secretary of Labor Robert Reich, most college administrations are unnecessarily big. Reform is needed to save money for students and taxpayers. And even before eager freshmen start in college, better estimated cost figures are needed. People should know exactly what to expect to pay over their 4 year stay without random tuition hikes or fees. This is yet another measure that could combat rising costs and loans.
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