Eclipsing credit card debt in this nation, and continuing to expand, student loans are a huge problem. No doubt about it. But is having an educated population a problem—or, is the overall cost of education the problem? Either way, our system is broken and we need to explore solutions.
There is a new student loan bill floating around Washington, D.C. which would “revolutionize” the re-payment of student loans. Haha…when has Washington ever revolutionized anything? Even better, this system has been used in Great Britain, so obviously it will work here because everything they do is marvelous.
The proposed legislation would require employers to withhold an amount from the borrower’s paycheck just like income tax. While this method appears more efficient, the government would oversee the process, thereby guaranteeing inefficiency (just a little more sarcasm to see if you are paying attention). One proposed benefit is a lifetime interest cap of 50 percent of the outstanding debt. In other words, a borrower with $50,000 in student loan debt would only have to pay $25,000 in interest.
My thoughts on this issue vary greatly. In my opinion, higher education should be free and on the internet, available to everyone. While this may be what the future holds, it is not so right now. Student loan debt is at $1 trillion and still ticking along. The proposed legislation would apply only to loans created after the legislation is passed; however, if it works, I’m sure Congress would change the law quickly so that it would become mandatory for all student loan borrowers.
It is alleged, with few specifics, that withholding these monies would benefit the U.S. economy. I find this difficult to believe and would like to see details on this very generic proposition. We will continue to follow this story, as student loans affect the lives of our clients.