Personal Opinion on Student Loan Crisis

One of the most controversial topics today is the student loan crisis without a doubt. Politicians and the population, old and young, are complaining for one reason or another and it’s having more and more of an impact on our economy, marriage and birth rate indirectly. I will get into many of the reasons below, but the effect I see personally, from reading articles and living through it myself is depressing me a bit little lately. Between my wife and I, we owe a pretty penny and I am hoping there will be better relief programs coming that make some sense for America. Imagine graduating college back in the ’80s and only having to pay off your college loans for maybe ten years max, probably much less in most people’s cases compared to nowadays where it can take 30 years or close to it for many. Several people give up and default because the major they chose doesn’t have many jobs available or doesn’t pay nearly enough to live on after making the minimum payment. We will dig deeper below, but I feel like we must find a balanced solution and not simply put all the disaster relief on one entity to save us all. My opinion is that we tax the wealthy slightly more, make colleges more accountable and less expensive, and have businesses pay up to a certain amount of student’s loans with certain restrictions.

First off, the most common go-to answer is that we tax the wealthy more. Many young people especially support this answer because they are, in my opinion, slightly selfish, inexperienced with financial matters or do have sometimes have some valid ideas. Several young people, including myself, usually are financially immature and use student loans to go to the college of their dreams and use the money for fun money a lot of the time. Not understanding compound interest, how long a loan takes to pay off and the reality of what their new job may pay will be a huge eye opener once they get started in their career and need to pay back student loans after a short waiting period of typically six months. There are some lucky enough to have savings accounts, college employers that pay for it, etc., but many don’t have these options. One easy solution is, of course, to tax the rich and have them pay for everything or a good portion through either upfront grants or tax-rebate programs. Taxing the rich is complicated, and needs to be thought about carefully in terms of what tax bracket level do we start taxing additional money and will it cause them to pull money from other areas like charity or business investments. I believe that we should only tax the highest tax brackets as they are a minority, and most of them won’t be significantly affected by this or will get used to it over time. Many opponents to this idea may say that the wealthy will try to leave the country or hide their money in other ways, but I think most will more than likely pay into the system. The middle class especially is hit the hardest because they don’t get state benefits for many things and need to pay student loan payments on top of everything else. The rich normally pay out of pocket, have saving accounts that pay for their child’s college or the child lands a high paying job due to the great school they attended and connections they have in turn they can pay back the loan is much easier usually. When it comes to the poor, many don’t attend college, get grants, have small payments due to income or default without caring much about the credit impact it has. I am not saying I am correct in all these cases I present above, but I believe this is the case most of the time. Overall, taxing the uber-wealthy is one part of the solution but not the end all one, unfortunately.

Another idea and novel one I have seen lately is to make colleges more accountable for the student’s success.  This doesn’t mean a college gives student’s passing grades so they can skim through school and find a job. What many of the proponents of this idea are getting at is for the colleges to have more free services that help students succeed, such as tutoring, counseling, additional study materials, career coaching, etc. There are so many students who simply try to skirt by and fail or barely pass because the college doesn’t have good services, they can’t afford the help or the student may be heading down the wrong educational path and could use some redirection, in turn, to be more passionate about what their future career or find a path that makes more money and makes them happier hopefully. I also believe all college students and high school students should take one or two financial planning and career guidance classes so that they don’t make simple mistakes that can have long-lasting effects on them and in turn our economy. Although we do see some logical arguments against this such as an article in Forbes where it states, “If colleges get stuck with risk-sharing fines when their students can’t pay their loans, they’ll do what they do with other new costs: stick students and taxpayers with the bill.” (Brown, 2018). Another side point I want to mention as well is that colleges need to find ways to reduce operational costs even if that requires a few less staff, cheaper grounds cost, less expensive textbooks, etc. Many colleges have luxuries they don’t need, overpaid staff or increased tuition because they know the government will give out loans to pay for it. These reasons are why college costs have risen so rapidly and need to be addressed, although it may be easier said than done. Overall, I think if a student is given better advice, he may make less costly mistakes by taking out fewer loans and making better career choices that make paying back the loan more manageable.

Lastly, a new concept in the last ten years and one that will probably increase in popularity is where businesses help pay back student’s loans in return for a time commitment by the employee and possibly performance goals they need to meet. U.S. News states, “Workforce experts say this type of benefit acts as a recruitment tool to attract young talent, especially since many recent college grads who are applying for entry-level jobs are saddled with student debt.” (Powell, 2018). Paying back student loans could be easier for a business, at least medium to larger ones, that can build up a savings account money pool with interest they can pay out from more affordably than any single person could. Small to medium businesses may have a harder time participating in this program and may pay the employees less for a few years, or the government may subsidize part of their tuition forgiveness funds. I believe this will help a lot for many graduating student’s today. I think it needs to be a joint effort between businesses and taxes to reduce significantly the burden on students who want to have a great career, family and happy lives without constantly worrying about how to make it month to month. There aren’t many opponents to this other than small business who can’t afford this perk, and it could cause them to lose top recruits to larger companies who can bankroll this idea. Employees also need to remember that a lot of the time taking the perk requires a time commitment to the company since they are investing in you, although I believe these commitments will lighten as more and more employers offer this perk.

In conclusion, something drastic needs to be done to address the growing epidemic of student loan debt in this country and the burden it will have on our economy, stress levels, and way of life as we know it. People simply aren’t making the choices they used to simply because student loans are taking up to one-third of their paycheck each month in many cases. People are getting married later, not having or having fewer kids, not purchasing homes, etc. All these things will have lasting effects and transform our country into something much different than we know today if we don’t do something about it. There is still some old money around now bailing many young people out, but it won’t last forever, and we need more extensive solutions and cost reducing methods to tackle this epidemic in a way that can work long term and not just a silly patch some politician dreams up to get re-elected. I believe when the children of baby boomers start taking more control, we will see much more of these policies I talked about implanted. I hope society can work together in a way that will make it successful and not fall apart.

References

• Brown, Ames. “How To Hold Colleges Accountable: Don’t.” Forbes, Forbes Magazine, 4 Apr. 2018, www.forbes.com/sites/amesbrown/2017/09/18/holding-colleges-accountable/#5706a90e5173.
• Powell, Farran. “What to Know About Employers That Pay Student Loans.” U.S. News & World Report, U.S. News & World Report, 23 July 2018, www.usnews.com/education/best-colleges/paying-for-college/articles/2018-07-23/what-to-know-about-employer-plans-that-pay-your-student-loans.