The student loan program has mushroomed into a galling yoke to students and the economy. The average student owes just over $35,000 in student loans. It is not unusual for dental students to owe $500,000 in student loans and medical students to owe more than $300,000 in student loans. There are more than 44 million borrowers who collectively owe $1.58 trillion in student loan debt in the U.S. Student loan debt is now the second highest consumer debt category - behind only mortgage debt - and higher than both credit cards and auto loans. The default rate, loans that are more than 90 days in arrears is 11.4%
This crises cannot be solved overnight, however I propose the following:
1. All student loans should have a fixed interest token rate of 1%
2. Student loans for nursing, MD, social work, teaching programs should be interest free to attract people into these programs to lessen the severe shortage in these professions. Loans for these programs should be forgiven when individuals from these professions work in underprivileged areas.
3. Student loan debt should be allowed to be discharged in certain bankruptcy cases and in cases of disability
4. Loans that are more than 10 years delinquent should be placed in collection for the principal amount only, the interest should be eliminated to encourage repayment
5. Though many may take issue with the concept of loan forgiveness, it must be remebered that the student loan program has been one of the most predatory programs administered by the government upon its own citizens. Many students, though college educated, have not been able to secure employment sufficient to pay off their loans because of the excessive interest that the loan has accrued. The forgiveness of student loans out to begin with the poor, those who have been chronically unemployed and underemployed. Forgiveness of student loans for those in this category can easily be verified by income tax records.
6. Loan forgiveness is a necessity. It is past time that we stopped catering to the rich of this country and start taking care of thepoor. We can forgive nations around the world for their debt and bailout industries, it is now time to benefit the poor and unprivileged.
Tuition is outpacing students’ ability to pay, and the share of students taking out loans to finance their degrees rose from roughly half (49%) to over two-thirds (69%) from 1993 to 2012, according to the Pew Research Center. Between 1993 and 2020, the average loan amount grew nearly three-fold, surpassing $30,000.
Black people with a college degree have lower homeownership rates than white high school dropouts. Moreover, research from the Federal Reserve Bank of St. Louis finds that after college graduation, white households receive wealth transfers from their family to help pay for things like the purchase of a home. Black households, on the other hand, transfer their increased post-college income to help their family. Different patterns of intergenerational transfers contribute to nearly three-quarters of Black borrowers’ student loans having a higher balance today than they did originally.
Four years after graduation, the average Black college graduate owes $52,726, compared to $28,006 for the average white college graduate. With federal interest rates between 2.75% and 5.3%, the average white household will be able to deduct their complete interest payment each year while the average Black household will not. The tax system prevents low-wealth, high-income households from ever catching up with high-wealth households.
Four years after graduation, 48% of Black students owe an average of 12.5% more than they borrowed.
After that same period, 83% of White students owe 12% less than they borrowed.
40% of Black graduates have student loan debt from graduate school while 22% of White college graduates have graduate school debt.
Over 50% of Black student borrowers report their net worth is less than they owe in student loan debt.
Forty nine percent of Black students’ parents made less than $35,000, while 69 percent of white students’ parents made more than $70,000.
“Put simply, Black borrowers both acquire more debt and, due to wage and employment inequities in the labor market, are in more precarious positions when it comes to their ability to repay,” the authors write.
Twenty years after starting college, white borrowers’ median student debt fell to 6 percent, whereas the median Black borrower still owed 95 percent of their loan, according to a 2019 report by the Institute on Assets and Social Policy (IASP) at Brandeis.