College financing has gotten to be too onerous and complicated, so it’s difficult for families to negotiate the process and, as a result, it’s hobbling graduates’ attempts to live normal lives. Congress has largely ignored these Americans, though, as it focuses on the national debt and the Tea Party agenda.
There’s been a sharp uptick in student loan defaults — the highest rate in a decade — as more students come out of college an average $24,000 in debt, yet can’t find jobs.
Part of the psychology embedded in a college education is that the diploma should enable you to get a living-wage job, pay off debts and live a prosperous life. That was the big selling point of a high-cost diploma. That isn’t happening now for most graduates.
When the debt bubble burst three years ago, did students and their parents really expect to be saddled with onerous debts and face a lousy job market when they signed up for expensive degrees?
If we can bail out the banks, we can certainly find long-term solutions to student debt. My colleague, Linda Stern, recently outlined some of the basic money-management approaches to reducing student debt in her weekly column. It’s all good advice on a personal level — from creative payment strategies to loan consolidation to what to do if you simply can’t pay at all.
But there are things to do more public level that could help a lot of people at once. One approach would be to compel universities with large endowments to offer more grants, which don’t have to be paid back. Congress needs to back programs that allow students to deleverage at the lowest-possible rates and forgive the debt under certain distressed circumstances.
It would also make sense to consolidate the myriad tax breaks for college financing into one unified credit based on income.
No discussion of tax reform should exclude college financing. Higher education financial aid should get as big a tax break as energy producers, agriculture or hedge-fund managers now reap.
Larding up students with more debt is not the answer. Not if you want to get them off the streets, literally, from their protests.