Like many millennials, I have a lot of expenses coming up. I’m about to get married. I’m looking to rent a nicer apartment. And yes, I enjoy the occasional avocado in the morning.
But like a lot of people my age, I spend a lot of money paying off my student loans. Of course I’m tempted by the recent proposals from progressive Democrats: forgiving large sums of student debt or, per the recent proposal from Sen. Bernie Sanders (I-Vt.), to cancel it altogether.
Though I’d certainly enjoy saving thousands of dollars a year for well over a decade, this is the wrong approach to confronting our student-debt crisis. If we don’t want student debt to pile up all over again, we need to scrutinize the schools that caused the crisis in the first place and make sure young people are savvy debt consumers.
When I entered college, I did so as a consumer — and an extraordinarily privileged consumer at that. My family was well-off enough for me to be able to choose private, Jesuit education at Marquette University in Milwaukee, though we had to take on public and private debt to finance it.
This was a risk, but I was willing to take it, in part because I knew how that debt would fit into my larger financial outlook. I understood the interest payments are tax-deductible and could ease my tax burden once I was employed. I also understood that paying my loans could help build my credit score, making it easier for me to access credit down the line, such as for a house.
Of course, it helps that a number of factors broke my way. I landed a wonderful job at The Post, meaning I was employed before the end of my loan’s six-month grace period after I graduated. With the help of a strong economy, I was able to wipe away my private loans faster than I anticipated, and I’ve already put a good dent into my public loans, too. So personally, I’m doing just fine; I don’t need the government’s help.
I’m aware that not everyone has been as lucky. There are far too many college graduates who haven’t found a job that pays enough or who didn’t make it all the way through school. Researchers at the Brookings Institution estimated last year that as many as 40 percent of the approximately 44 million student debtors in the United States could default by 2023. There’s no question about it: This is a crisis that needs addressing.
But blunt proposals such as canceling debt — to the tune of $1.6 trillion — or offering free college are laughably unserious. Beyond the fact that our federal deficits are already out of whack, thanks in large part to the Trump administration, the problem demands a far more nuanced approach.
First, for-profit education should be at the forefront of this issue. As the Brookings report detailed, almost half of all students who enrolled at a for-profit school in 2004 defaulted within 12 years. That’s close to four times the default rate for other students, even though students at for-profits typically don’t take on as much debt. The government should be hammering these predatory businesses; instead, the Trump administration is loosening the reins.
Second, the higher-education industry needs to take a deep look into improving completion rates. Lawmakers can help by identifying “failure factories” — or schools that graduate low percentages of their students within six years. We could also experiment with providing emergency “completion grants” to students struggling to finish school simply for financial reasons. That way, we can better ensure that those who take on debt will end up with a degree and a job to pay for it.
Finally, we need to do everything we can to make sure that students are financially literate. They should be able to understand the terms of loans and to project different income scenarios post-college. Ideally, this would be a high school requirement, and it would pay dividends beyond the college years. Students who graduate with a better understanding of interest rates and amortization tables will be able to make smarter decisions not just about student loans but also about car payments, mortgages and eventually, financing their own children’s educations.
Issuing student forgiveness or canceling debt without these reforms risks letting bad actors in the education system off the hook. And there’s plenty of room to improve existing loan forgiveness programs. Consider that of the 54,000 borrowers who asked for public-service loan forgiveness last year, 99 percent were denied. There must be options to expand that program and others in ways that are more generous and target those who need relief the most.
In the end, however, we should resist hating debt for debt’s sake. Higher education nowadays is bloated and far overpriced; no doubt, we should be debating the best ways to pare it back. But students pay for school because they think it’s a worthy investment, and most students find that to be the case. For them, there’s no reason for the government to pick up the tab.