Students’ Loans Essay Example
One reason Bernie Sanders is a rock star with millennials is his promise of free education at the nation’s public colleges and universities. What student wouldn’t prefer that over entering the workforce with an average of $35,000 in loans?
Don’t worry, we’re not about to get all soft-headed and endorse Sanders’ impossible idea. But the rest of us do have an interest in reducing the indebtedness of younger Americans. All those loans, which now total $1.32 trillion—and rising at $2,726.27 a second—are turning a generation into poor consumers. As Crain’s higher education reporter Steven R. Strahler writes in a special report in this issue, student debt is damping home purchases, small-business formation and even the starting of families. In an economy that depends largely on consumer spending for growth, it’s no wonder, then, that the recovery from the Great Recession has been so disappointing.
The question is what can be done to lessen the burden. One solution is to replace loans with grants. But while well-endowed private schools including Northwestern University and the University of Chicago can afford to foot the bill, this isn’t an option for state-funded institutions such as the University of Illinois. Similarly, Congress could increase appropriations for Pell Grants and states could reverse their pound-foolish ways and restore funding for universities, recognizing them as the gateways and economic engines they truly are. Schools also could offer loans with repayments based on a percentage of a graduate’s earnings instead of rigid schedules that too often leave lower-income adults impoverished.
Meantime, as students and their parents wait for government action, a handful of private-sector employers are stepping up with their own remedies. Companies including PricewaterhouseCoopers and Fidelity Investments are helping to pay off their employees’ student loans. They’re not being altruistic; the perk works as a recruitment and retention tool.
Student debt is a side effect of a trend that overall is a good thing: Forty percent of working-age adults across the nation and 43 percent in Illinois have a post-high-school degree or certificate. Generally speaking, a college education means lower joblessness and higher incomes. But what a shame if decades of that wealth is siphoned away to repay loans charging as much as 11.5 percent in annual interest—not only for the debtors but everyone else who depends on them as customers.