Let’s just say one very, very key thing. Student loan debt is a government made problem. It was something the taxpayers subsidized and the government helped manage and turn into this bizarre regulatory environment, attaching student loans to people in a manner that can’t be broken out from. In this process, we also see it tearing our economy apart. Young people can’t take career risks, move, start businesses, buy homes, or even start families due to this crushing debt that the government signed off on every person having. With that, let’s talk about how to fix it.
For this article, it’s going to be short and just be a basic rundown on what a student loan relief bill should look like. Some parts of it obviously will need more detail, but here’s the basic law I’d propose if a member of the House of Representatives.
Caps on debt attached to people – Right now, it’s shockingly common that a person just parked themselves in at $100,000 in debt to go to school. The spree of people with semi-worthless degrees from mediocre schools with six figures in debt is a sad, looming fact for people ages 22-30 in America. The most basic reform needed is just a final cap on these government-backed and IRS-attached loans. What should the number be? Realistically, $10,000 is a good number, and that is what Mark Cuban has proposed. A better one, however, might be $25,000 to start and $10,000 later on.
Not full percentage of debt – Along with capping the level of debt attached to people, it shouldn’t also be 100% government backed to avoid a shorter term bank risk to calculate. Meaning, if someone is going to get a student loan of any size, a percentage of it can’t be attached to students. So, say if $1,000 was taken out, 20% of that cannot be attached via government.
Government forgiveness – This is just the compromise to make it actually happen. The government should offer to partially buy out the people’s loans. Meaning, we should have an event in which the government will buy 30% of whatever someone’s debt is on the first $20,000 of debt, and 15% of all debts after that. So, if someone owes $10,000, they will get $3,000 of that absorbed by the government. If someone is $100,000 in debt, they would get $14,000 saved for them. To do this however, it’d only be done if the government can actually cut spending in the budget to pay this absorbed debt over ten years. Meaning, a cut somewhere like the Department of Education to find the $400-$600 billion, might make a strong incentive for the long-term shrinking of government in order to help younger people now. This plan isn’t the most libertarian friendly, but it is a strong incentive to pass reform and cut funds that help long-term.
Government absorption of debts – This is an offer made to people. The government will absorb the student loan debts of people under the age of 35, but with a catch; if a person agrees to have their debts absorbed by the federal government, they will have to pay 2% of their income to the government for the rest of their lives with zero deductions to repay this. They also will not have social security given to them until the amount of debt taken is repaid. The final part would be if the debt isn’t repaid, the government can take part of person’s estate when they die, to cover any losses made. Meaning, if someone owns a home, they can claim equity in that home to reclaim those losses, which they get part of the money when the home is sold. This model works to move the existing debts people have into a platform which, in the long-term, could be paid back to the government with interest, but in a more flexible model.
New mandates on colleges – If a college is to receive federal aid, they will be required to do research into the income potential and real employment of their programs and majors. This will happen in order that, when a student is accepted into a college or going to receive a loan, they will see this information and be shown what percentile the projected income this program does in comparison to the rest of the country, including the average income over the value of just a high school degree, associate’s, or trade. Doing this, there’s a forced flexibility on schools to be labeled and show the real income potential for students.
But overall… there’s not much more to say here. These are five very basic suggestions into addressing the government-made student loan hell zone.
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