Student Loan Reform

"If Wall Street can borrow money at 0.75% interest, so can college students. We need to stop treating students as profit centers."
- Elizabeth Warren

At its core, the financial crisis was triggered because too much debt was held in mortgages. Today, the total student loan debt burden outstrips the total mortgage debt burden at the time of the crisis. Having done nothing to correct the consolidation of Wall Street power, we are vulnerable to another collapse of equal or greater size to the last. Student loan debt is a crisis, and we need to treat it as such.
 
Even aside from the risk of financial calamity, the enormous student loan burden is crippling our economy. The majority of student loan debt is held by people in my generation – those who should be getting married, buying houses, and starting families. Our economy thrives when people my age are making big purchases, but right now all our disposable income is going to pay down our loans. I’m paying $800 per month in student loans, the absolute least amount I am allowed to pay, and that amount will continue to rise overtime until my last payment in 2045. Unless my earning power takes a huge step forward and I can pay down my loans more quickly, I will end up paying nearly $50,000 in interest alone. My story is hardly unique, and many are worse off than me – especially those who did not complete their degrees.
 
So what do we do about this problem? I propose a three-pronged approach:
           

1. Reduce the cost of higher education – I support making community college and trade schools free, which not only boosts our economy overall, but also means fewer people will seek education at a 4-year college. As demand for those programs goes down, so will tuition. A more ambitious plan would be to make all public universities tuition-free. I support this idea in concept, but adequately paying for such a plan would be exceptionally difficult to do.
 
2. Expand federal loan programs and make them interest-free – As it stands right now, our government profits directly from students paying off their high-interest federal loans. I find it morally indefensible that our government is profiting off the backs of those who seek more education. The country benefits when more of its people have more education, so we shouldn’t discourage people from seeking higher education by subjecting them to draconian repayment plans. As with so many problems, removing the profit motive will help more than any other legislation possibly could.

3. Provide mutually-beneficial repayment plans – The Obama administration pushed hard to create new repayment options, including tying loan repayments directly to income. Unfortunately, these provisions have been stopped by Education Secretary Betsy DeVos. By tying repayment to income, a borrower only repays what the market allows him or her to, which leads to lower default rates. This is better for each individual borrower, and for the country as a whole.   

Paid for and Authorized by Ryan Huffman for Congress