Recently much has been discussed on the subject of student loans. Let's look at this subject in more detail, to understand all sides of the issue.
First of all, let me state that I am one who had modest student loans, to the amount of about $8000. I studied engineering, and knew that I would be able to quickly return those loans, and in fact after just 5 years after finishing my undergraduate education, I had completely paid off those loans. I believe firmly that those loans should be paid back.
On the other hand, there are horror stories out there of people who had $50,000 or more in debt, couldn't pay the loans, had fees tacked on, and ended up with even more debt than they started with. These kinds of predatory measures are not right, and should be removed!
President Trump actually took action on student loans, in a way that wasn't very well known. As Forbes reported, President Trump effectively removed all fees and interest for student loans for the duration of the pandemic. This frees up money for those who are struggling and allows them to move forward. Those that are doing better can even pay down their debt to make it easier to finish it in the future.
So how can we properly use this valuable tool, but not abuse it? Student loan reform is something that absolutely needs to happen. I believe that student loan reform should include the following measures:
- Reduced interest and fees
- Some measures to encourage students to pay back their loans quickly
Let's expand on these details more. The interest rates right now are actually quite low on student loans, only 2.75%. However, many students are paying far more than that. I will be looking in to why that is the case, and figuring out ways to get those rates reduced!
Accountability is a more challenging thing. Some students don't realize that they are getting sucked in to higher and higher loans, and what that will require in their lives. The schools that they attend should have some responsibility as well, particularly if they are giving them so much with so little chance for return. However, it is critical that every student has a chance to succeed, regardless of the circumstances that they were born in to. For some, those who are going to med school, for instance, higher amounts of debt may be warrented. For others, there is less of a sense of this. What I believe should happen is those who are receiving student loans should be required to attend a short class, taught by their college, including life skills like repaying debt, refinancing loans, appropriately scoping out their debt, and similar types of skills. There should be a reasonable size of these classes, such that the students can have the chance to really learn and ask questions. Lastly, I believ ethat schools should bear at least some of the responsibility if the loans are not repaid. Maybe only a token amount, 10-20%, but enough where they will be more motivated to help their students succeed!
Lastly, I believe that students do need to be encouraged to pay back their loans quickly. A 0% loan isn't going to cut it unfortunately. Perhaps this could be a system similar to many store loans, if they pay back their student loans in 5 years they get them interest free. Maybe it could be a tiered system, similar to housing loans, where if one signs up for a longer time to repay loans, one has a higher interest rate. Whatever the system, it should encourage those loans to be paid off sooner.
Student loans are an extremely valuable part of helping everyone to succeed in life. Still, we must make sure these continue to be a valuable tool, and not a weight to the upcoming generation.