4 Common Sense Ways to Make Student Loans Less Awful

Photo Cred: Pinterest

Photo Cred: Pinterest

Yesterday, I read an article on Policy Mic about the comparative costs of higher education. In short, America SUCKS when it comes to college students.

If you’re like me, then you have exorbitant student loans that cause great monthly anguish. 12 million American young people are straddled with a collective 1.2 trillion dollars in debt.

What can go wrong when a large sector of people are overpaying for shit? It’s not like it’s ever happened before

I don’t believe in whining. I accept the choices I’ve made to attend a top tier university. And I definitely don’t regret my time in college. But something needs to be done about the loansharking industry that is college banking.

Student Loan memeThe American student loan system proves that higher education is a privilege and not a right. The long lasting and consequential sacrifices that must be made to attend university further highlights the truth that rabid income inequality is deliberate and systematic.

And honestly, NO ONE IS WINNING. The American economy suffers when a sizable sector of the population is in debt. ECON101: a healthy economy is one where the population is buying and spending on goods and services. Broke people don’t buy shit.

Student loans also cripple financial standing. Chunky student loans negatively affect credit ratings, which subsequently affect a person’s ability to buy homes, rent apartments, purchase vehicles, etc. Credit ratings can even affect prospective employment. The housing and car markets are still recovering from the 2008 economic downturn. When millennials can’t purchase these necessities, let’s see how well these precarious industries perform.

Heavy student loans also undermine worker productivity. Think of the wasted man hours of the customer service rep who needs to play therapist to the sobbing millennial who’s applying for deferment or forbearance. And for the college grad who is worried, anxious, and frustrated by unresponsive customer service reps and spiraling interest rates, their productivity at their menial interest level job is threatened.

And finally, super high tuition and associated costs deter potential college students from attending top tier universities, which, in the long run, jeopardize the American landscape. For one, uneducated and under-educated young people have greater difficulty finding meaningful and well-paying employment, thus creating even more socioeconomic hardships that are tough to overcome.

In America, we cling to the idea that we are somehow exceptional and perfect. I don’t buy it. There are a lot of things we’re doing wrong… and higher education is one of them.

So here’s what I think should happen. Granted, I crunched no numbers and I don’t pretend to be a seasoned financial analyst. But I do think there are some common sense solutions that are ignored out of greed.

1. Tuition cost controls
Call it socialism, communism, or whatever. I don’t care. We need cost controls on tuition. Presidents of universities and colleges should NOT be making 6 and 7 figures while their students are racking up debt. Colleges should not receive subsidies or government aid if they refuse to manage their tuition costs. It’s a moral hazard when university presidents become millionaires off the backs of students.

2. Fixed interest rates.
Charging upwards of 8% in interest is loansharking. High interest rates ensure that college students stay trapped in a viciously expensive cycle for years to come. High interests jeopardize credit rates and financial health, which only threatens national economic health.

3. Monthly payments tied to income
If you’re making $30k with upwards of $50k in loans, you should NOT be required to pay a $500 monthly minimum. All minimum monthly payments should comprehensively reflect individual costs of living and income.

4. More forgiveness options.
If an individual is religiously paying off their students loans, the remaining balance should be forgiven after 40 years. Furthermore, student loans should be discharged through bankruptcy. Currently, lenders have substantial bargaining power because student loans can never be erased. Some believe that if student loans can be forgiven through bankruptcy, an army of college grads would start declaring it. Doubtful. Nobody WANTS bankruptcy; it’s an indelible stain. Bankruptcy should only be utilized in extremely severe circumstances. Strict measures should be implemented which makes declaring bankruptcy for student loans a nightmare … but the option should be available.

Again, I’m no financial analyst or political expert, but these measures make sense. Arielle for president, 2016.

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5 responses to “4 Common Sense Ways to Make Student Loans Less Awful

  1. Well said…
    Maybe you’d be interested in the book Capital by Thomas Picketty. It’s lengthy (like 700 pages) but a real page turner (I just started) with all the facts about economics you can stomach. I’m pretty sure there was a recent PBS show with Bill Moyers interviewing Picketty… in case you want a reliable introduction to or background on the author… And I don’t know yet if there are solutions outlined, but the problems are certainly laid out plain as day in the book… which at last helps if we are ever going to solve anything…I’m thinking (rationally not idealistically).

    Like

  2. Reblogged this on immerseindifferences and commented:
    Honestly I think public education should be free to students. More people would be able to go to school, which would raise revenue for the whole economy because they are able to buy more goods and services without having to section off a good portion of their check each month to something that should be free.

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  3. I won’t tell you anything new, but this is the same with everything in life.
    You’d think experience showes us at least anything, but alas.
    Disagree if you will but the world changes rapidly, and we have no control over it.
    For instance, imagine Barack had any balls to put Russian bear to his place, but it seems like it’s not happening, welcome WW3.
    Great post, thanks!
    Sarah http://phyto-renew350i.com/

    Like

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