Tackling student loan debt, $1 trillion dollars at a time; a fresh perspective on the issue from guest blogger David Chambliss
$1 trillion dollars is a lot of money! It is a number so large, I can’t really comprehend it. I also can’t comprehend how we expect to grow the U.S. economy if we continue to graduate our best and brightest students, strapped with debt.
When I was 18 years old, my father told me that I would need to take out student loans to attend college. It would cost me almost $60,000 to attend a 4-year, public university. As a first-generation college student, I thought I had two options – accept this debt (which I also couldn’t comprehend) and go to college; or, turn down the student loan and live in my parents’ basement for the rest of my life. If this sounds like a familiar dilemma, it’s likely that you or someone you know has also accepted the “choice” of living with mountains of student loan debt.
As of 2009, student loan debt has even surpassed credit card and auto loan debt!
This debt is killing the purchasing power of recent college graduates, impacting the economy in innumerable ways, but namely through a shift in renting vs. owning homes, a lack of retirement and other savings, and placing a hold on the desire/ability to start and grow families.
Now, don’t get me wrong – taking on SOME amount of student loan debt for the attainment of higher education is a reasonable, even good thing. I am not making the case that higher education should be 100% free – but the idea that some colleges and universities are “affordable” is almost laughable. And that shouldn’t be the case in a country like ours.
With the debt bubble extending past $1 trillion dollars, politicians and policymakers, higher education administrators, economists, public advocates, students, and families are scrambling to figure out a solution…ANY SOLUTION. So, to this end, n Saturday, June 20, as thousands of people gathered (rain and shine) for Columbus’ PRIDE Parade in the morning, then the Buckeye Country Music Festival in the evening, I, instead, joined 20+ other individuals to “hack” solutions to this very pressing policy problem. The event was called “Polithon,” it was the first of its kind, and it took place in the Ohio Union.
Side Info: Polithon is a DC-based non-profit organization that calls upon millennials to seed “post-partisan solutions” to some of the country’s most pressing policy issues. After selecting a focus issue, the organization brings community leaders, policy wonks, and just generally active citizens together for a day or weekend “hackathon,” where the goal is to compete in teams to come up with possible solutions to the issue at hand.
I was fortunate to be chosen to attend the Student Loan Polithon at The Ohio State University, where I had the opportunity to spend an entire day with 20 very smart, motivated, and innovative thinkers.
This bipartisan group of millennials came to Ohio State’s campus from Cincinnati, Youngstown, Columbus, and elsewhere around Ohio. Participants ranged in age from 19-31, and represented numerous stakeholder groups – undergraduate students, graduate students, community organizers, higher education administrators, political consultants, lobbyists, and lawyers. For twelve hours, we sat in a room and tried to answer this one question: “How can the state of Ohio tackle the issue of student loan debt in a systematic way, dealing with access to education, educational financing, loan reform, the mounting cost of higher education, state divestment, student choice, remittance programs, and dealing with the damage already done?”
As much as we wanted to find the silver bullet to this complex issue – we came up with three areas that we believe present a more comprehensive solution. First, we don’t believe consideration of your options as they relate to higher education should begin when you are 18-years-old – it has to start WAY sooner. After reading my group’s recommendations, listed below, please let me know if you agree!
- We need to invest more in individualized guidance for 7th-12th grade students and their parents, who need time to reasonably weigh the cost-benefits of their options, prepare for college financing, explore all post-secondary education options, and mitigate against overly burdensome debt: There’s no doubt that too many students and their families approach college without a full assessment of the options available to them, or without practical understanding of the long-term impact of taking on excessive amounts of student loan debt. Our recommendation was that the State of Ohio should mandate (and fund) a permanent expansion of our current middle and high school guidance counseling programs, with the explicit focus placed on providing resources to minimize debt overload, educate about options, and help families and students prepare for the paths they decide to take. Many high school students are set on the idea of going directly from high school to a 4-year college, without considering options like taking a gap year to work, attending community college, or taking post-secondary courses while in high school, which are paid for by the state.
- We need to establish an accountable process for state review of the financial plans of public universities, whereby both mandated and recommended measures are given to colleges in order to root out administrative inefficiencies: While colleges and universities are asking the State for more money, and increasing tuition every year (yes, I know many schools have capped tuition for years), perhaps we need to be asking the colleges to cut down on their spending as well. Not just asking — sometimes we should be telling. One example of inefficiency I submit to you is the Campus Financial Accountability Act (Senate Bill 6) made state law in 1997. Its purpose was for the State of Ohio to review the financial wellness of the colleges and universities it funds, and grade them on a score of 0-5. Any school that goes below a 1.75 for more than 2 years in a row is put on “fiscal watch”. Yet, since this bill was enacted – ZERO colleges have been put on fiscal watch (at least according to their data). How, then, are we holding our public institutions accountable for their spending? Are we not being tough enough on their financial behaviors? I maintain the latter. Furthermore, we must continue to explore ways in which our public institutions can help students graduate in a more timely fashion. The four-year model is outdated. With the implementation of new technology and innovative pedagogy, we must find new ways for students to receive a college education in under 1,460 days (that’s four years for you non-math majors).
- It’s critical that we initiate better financial incentive programs, and improve on the effectiveness of existing programs, for individuals with student loan debt to seek remittance: We must implement programs that help individuals eliminate student loan burden in a way that is beneficial to them, and beneficial to the State of Ohio. We must incentivize college graduates to stay, live and work in Ohio, and we can do so reasonably through contingent student loan remittance programs. One way the federal government has stepped up to the plate in this area is through an IRS program that allows individuals to deduct on their annual taxes the interest paid on a qualified loan up to $2,500. But this is not enough. There are currently a few programs in place by the federal government for graduates who work in the public sector, but if we want to retain educated citizens and attract new ones to the State of Ohio, we must be innovative in our approaches. We must explore options like providing ways to consolidate student loans, creating loan remittance incentives for first-time home buyers, and establishing partnerships with private companies that would allow co-opt a portion of an employee’s student loan debt in return for tax incentives (don’t roll your eyes, many hospitals have this in place now for their residents).
We are a nation that prides itself on having the best colleges and universities in the world. We (most of us) encourage our children from a young age to dream big and work hard towards their goals – we tell them that with hard work AND A COLLEGE DEGREE, you can be anything you want to be. This used to be the case, at least, back in your parents’ day when the wages for a college-educated person significantly outweighed the cost of college. But today, our college graduates are leaving school and, if they are lucky, finding a job that pays them an annual salary that’s close to the size of their student loan debt. (Full disclosure: My first year out of graduate school, my student loan was almost 3x the amount of my annual salary).
I’ll finish with this – clearly I don’t have all the answers to this complex problem. I call it a problem and not a crisis, because if it were a “crisis” there would be much more outrage by the general public. But, the needle is moving ever so closer over this higher education bubble – and I don’t want to be around when it bursts. So, I’ll ask the same question of student loan debt anti-reformers that Congressman John Lewis (GA) so famously asked of those tentative about the civil rights movement in the 60’s – “If not us, then who? If not now, then when?”
If you’d like to learn more about student debt, here is a video of a great TedX speaker from Washington University, professor Greg Gottesman discussing student debt: