Student loan debt is getting out of control. More than 1 million people default on their student loans every year. That is 22% of borrowers. And the numbers are rising; 40% will default on their student loans by 2023. For borrowers under age 30, their average monthly payment is almost $400. Student loan debt now exceeds $1.5 trillion — surpassing both auto loan and credit card debt. It is an epidemic that will continue to get worse unless something is done.
Making tuition “free,” as some Democrats recommend, isn’t the solution, since that just passes the debt along to other Americans as taxes are raised to pay for it. It also doesn’t work. In Sweden, where tuition is free, 70% of students borrow money for things like room and board. This is the same rate as students that take out student loans in the U.S.!
It would be nice to get the government out of the business of student loans completely, but since that will probably never happen, here are some realistic solutions that may help.
There are two parts to this dilemma. First, the laws must be changed to stop this from continuing. Second, address existing borrowers who cannot repay their loans.
Stop the emphasis that everyone must go to college. The percentage of high school graduates going on to college has increased to 67%. But many people are perfectly happy with trade schools. Student loans for trade school are far cheaper than for college. Encourage people to join the military, which can help pay for school. Students need to start considering doing their first two years of college at a community college, then transferring to a public university. Some degrees, such as nursing, can be completed at a community college in two years. Urge students to work while going to college, even if it means taking longer to complete a degree. High school guidance counselors can be of great assistance in this area.
Start teaching money management as a required class in high school or college. Students today are so coddled by their parents they expect to have nice things while in college instead of putting the money toward educational expenses.
States should offer loans that are invested. One of my law school loans was from the state of Massachusetts. After I’d made payments on it for several years, I was informed that I no longer owed the $6,000 remaining on the loan because the bonds that had been invested in had performed so well.
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SOURCE: Christian Post, Rachel Alexander