Student Loan Debt

Indebtedness

  • I believe that student loan debt – and high-levels of indebtedness, in general – is a problem for society. This high level of student loan debt means that many young people will be unable to purchase a home or marry and start a family on sound financial footing.[1]
  • However, while left-leaning policy recommendations of “free college” and/ or loan forgiveness may seem like a good idea to some people, these policies don’t address the ROOT CAUSES of the problem of indebtedness; NOR do they ensure that future generations have received the necessary education to prepare them to COMPETE effectively in the global economy.
  • Additionally, loan forgiveness – if enacted at the Federal level – does not have a high “fiscal multiplier” associated with it, which means loan forgiveness will inevitably add more to the FEDERAL debt, which is already dangerously high, and leave little to show for it when compared to other forms of Federal assistance.[2]
  • And when we increase the Federal debt, that means we crowd out spending for other critical areas such as Social Security, Medicare, infrastructure, education, and defense.
  • Therefore, as an alternative to what some Democrats are proposing, I believe government SERVICE could be used to help reduce one’s debt load[3]:
  • BUT INDEPENDENT, SUSTAINABLE SOLUTIONS must focus on IDENTIFYING & ELIMINATING ROOT CAUSES of the problems we face as a Nation – & in this instance, it means keeping students out of debt in the first place, while ensuring they have the knowledge, skills, and abilities to COMPETE IN THE GLOBAL ECONOMY.
  • That means, when it comes to student loans, we need to shift FROM our broken “pay-for-enrollment” model – which places NO demands on institutions of higher learning to produce good outcomes – TO an “outcome-based funding” model. I recommend this short blog post for more information on student loan “outcome-based funding” models: https://www.christenseninstitute.org/blog/the-student-loan-crisis-wont-disappear-unless-we-tackle-the-root-cause/
  • Even MORE important, though, is for us to change the narrative around loans and indebtedness in this country; and yes, I am a fan of Dave Ramsey’s approach when it comes to this: https://www.ramseysolutions.com/debt/student-loan-forgiveness

[1] As a West Point graduate, I was fortunate to not have any student loan debt after graduation.  My repayment for the world class, taxpayer-funded education I received was to serve our country as a military officer – which I did for 20 years.  However, my wife, despite working her way through college, did graduate from ASU with student loan debt – so our family is well aware of the challenges posed by student loan debt.
[2] https://www.crfb.org/blogs/partial-student-debt-cancellation-poor-economic-stimulus?emci=ec66cd27-3cc5-eb11-a7ad-501ac57b8fa7&emdi=5f1e4401-59c5-eb11-a7ad-501ac57b8fa7&ceid=131704&fbclid=IwAR0ISvUAAY4VNx-xSs0f-MV5yGR3wxTOstUPhR46CCpkMeEaA-BHUStCaOs
[3] Public service – especially in education – is already part of the Federal government’s solution to address student loan debt: https://studentaid.gov/manage-loans/forgiveness-cancellation/teacher

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