The year is winding down and as we prepare to say goodbye to 2012, questions come to mind about what might have led us to where we are now and what choices we can make differently so as not to make the same mistakes next year. When it comes to student loans, the system is so plagued by problems that it’s difficult to know what’s what. So let’s pull the system apart a bit in order to see how each element can be changed for the better.
1. Make Student Loans Harder To Obtain
Student loans are currently incredibly easy to obtain. Students are handed loans with little idea of how the education they are pursuing will allow them to repay their loans. Not all degrees are created equal, but it’s as easy for an engineering student to get a loan as for a philosophy student, yet the two career paths offer drastically different earning potentials. Students are not required to be educated on or counseled about personal finance and how to get a reasonable return on their investment in higher education. Hopefully things like the Financial Aid Shopping Sheet and responsible borrowing programs like Making Loans Work will set us on the road to change.
2. Allow Discharge Through Bankruptcy
While it’s typical for debt owed to the government to be nondischargeable (which doesn’t explain why private student loans are also de facto off the table for bankruptcy protections), it’s not typical for government loans to flow like water into the hands of unsuspecting young people to be ultimately collected by college reservoirs. Because school loans are nondischargeable, there’s no incentive, economically at least, for lenders (private or public) to turn off the faucet.
3. More Money For Public Education
Essentially pubic education is being subsidized through student loans. Tons of government money is pouring into higher education, but it’s the student who’s left holding the bag. Why not give the money directly to schools, thus taking the student middleman out of the equation and stripping colleges of their financial incentive for tuition hikes?
4. Less Federal Financial Aid Money For Higher Education
With more money going directly into higher education, as in the above scenario, there wouldn’t be the need for exorbitant student lending. Wouldn’t the cost of an education soon begin to reflect its actual value instead of skyrocketing at many times the rate of inflation?
5. Define Higher Education More Accurately
In our culture there is an inherent rift between school and the real world. Our education system is held up as the pinnacle of all human achievement and yet that system is designed to nurture a very small and select set of skills, with little value attributed to any other of the vast riches that make up our human capacity, intelligence and experience. It’s not that there’s anything wrong with academic learning, it simply encompasses a limited scope. So is it really a good idea for college and this one set of skills and values be the only option for young people trying to discover their passions, abilities and way of life in today’s world?
Hopefully with thoughtful, open and honest conversation we can end the problems that we see today. These issues need to be addressed in a number of ways, though, and one of those ways is to help borrowers who have already become victims of the current flawed system. Fortunately there are socially responsible people out there who have created student aid organizations to assist students in getting their debt managed and under control.