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Tuesday, June 18, 2024

Address student debt with long-term changes

Graduation time is coming, and with it follow the concerns of getting a job and paying back loans. The timing could not be better for U.S. Secretary of Education Arne Duncan to visit Madison and gubernatorial hopeful Kathleen Falk to release her plan to fix what many are calling a student debt crisis.

The idea of having the national average $27,000 in student loan debt is daunting for individuals, families and society. But simply passing legislation and forgiving debt will not fix the problem. More needs to be done to make sure this type of crisis does not happen again.

Falk and Duncan both propose to allow student loans to be forgiven at some point. This may seem a necessity with the total student loan debt over $1 trillion, but that number comes from the fact more people are attending colleges and taking out loans. Furthermore, in 2009 about 9 percent of student loans were in default, meaning 91 percent of students were still paying back their debts on time.

In an economic downturn, more of every type of loan goes into default. The difference between student loans and other loans is school loans are more difficult to get rid of in bankruptcy and there is no capital—like a house or car—for a student loan to be backed by, so repossession is not an option.

Instead of allowing certain borrowers to be let off the hook, the way loans are dealt out and paid back needs to change. Borrowers need to be made more aware of how student loans work, as Falk puts forth in her plan. Lenders of student loans should also be treated like any other lenders.

Currently, student loans are very difficult to write-off in bankruptcy cases. If they become delinquent, they should go through the same processes as car, home or any other type of loans. By treating student loans no differently, lenders will be less predatory with their practices and more inclined to restructure loans to get their money back without taxpayer help.

Furthermore, the path to attending a university needs to be rethought. Not everyone can or should go straight to a university. A cheaper, equally valid path is to attend a junior college for the first two years to get general classes out of the way at a fraction of the cost. Reducing the economic burden on students in the first place is one way to address the looming student debt issue. Doing so while still allowing students to receive an education is even better.

The biggest issue with student loans is not enough students are getting jobs out of college. There are fewer jobs, and many available do not match up with students’ qualifications.

Students and universities have always operated on the assumption students should follow their hearts when it comes to education. But it may be time that students and advisors think about adding courses that prepare students for the jobs available.

Many incoming college students do not have a set idea of what they want to study. The university should focus on nudging and keeping students in science, technology, engineering and math fields. Many students start their career in STEM fields, but drop out. Universities need to up their efforts to keep STEM majors. Duncan has stressed the importance of increasing college graduation, but we also need to narrow the focus on graduating more students with degrees that prepare them for future employment.

Of course, some things beyond university or student control will help as well. The economy needs to turn around, opening up more jobs and opportunities.

Fixing any problem cannot be done by just signing it away in legislation. Ill-advised policies in the student loan market need to change, making them like any other loan. Furthermore, with the continually rising cost of education, it may be time for students to take pragmatic measures to save money and still receive a good education. It is tempting and politically advantageous to just write off loans, but it will only be a quick fix, and more lasting changes in policy and attitudes need to be made as well.

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Matt Beaty is a junior majoring in math and computer science. Please send feedback to opinion@dailycardinal.com.

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