Addressing Student Loan Debt in America: A Comprehensive Analysis
Introduction
America and its citizens have dug a deep hole, particularly when it comes to student loan debt. The federal government has been lending money to students without proper underwriting standards, leading to a significant amount of unpaid debt. It's time for a master class in the subject, following the insightful advice of George Carlin, who emphasized creating valid employment options before investing in higher education.
The Core Issue: Employment and Underwriting Standards
The starting point for addressing student loan debt must be creating valid employment opportunities for students who do not wish to pursue higher education. Unfortunately, the demand for jobs in fields that do not require a college degree far outstrips the number of such jobs available. As a result, only 29% of high school graduates matriculate and successfully graduate with a well-paying job. This disparity is exacerbated by the federal government's default lending policies, which allow almost any college student to borrow money, regardless of their future prospects.
Reforming Underwriting Standards
To ensure that student loans are only given to students who can realistically pay them back, underwriting standards are critical. My suggestion is to require a high school GPA of 3.5 or higher and a standardized test score at the 80th percentile, which equates to a SAT score of 1240 or an ACT score of 25. These requirements would help ensure that loans are only given to students who have a higher likelihood of obtaining a well-paying job after graduation.
Student Loan Repayment and Collection
Instead of using income-based repayment plans, which only shift the burden of repayment to those who have the lowest incomes, we should treat student loans like any other loan. This means that monthly payments should be based on the loan amount, loan term, and interest rate. To ensure that loans are paid back, wage garnishment should be implemented as a remedy for non-payment. Additionally, students should be given the option to refinance their loans, just like other financial obligations, to better manage their payments.
Addressing the Root Cause of Debt
Most students today use student loans to enter college, but due to degree inflation, it is often challenging to secure higher-paying jobs or advance in their careers. Many employers still use degrees as requirements for job positions or as barriers to reaching the next pay scale. Furthermore, it is unlikely that the 1.3 trillion in student loan debt will be repaid in one's lifetime, as much of the money has already been spent. Therefore, it makes more sense to recoup investments through value-added taxes rather than relying on minimal loan payment amounts.
Conclusion
Addressing student loan debt requires a multifaceted approach that includes robust underwriting standards, fair repayment policies, and a commitment to creating meaningful employment opportunities. While there will always be challenges in this area, a well-thought-out strategy could bring about much-needed relief for millions of American students.
Tags: student loan debt, higher education, employment options, income based repayment