- Although it is important to keep in mind than students with six figure debt burdens are relatively rare, this does not mean that the issue is not important.
- The total amount of student debt out there is enormous, enough to become a real drag for the economy.
- To make them worse, they are incredibly hard to shake off, even in bankruptcy.
- There are some studies pointing out that college grads with a debt burden are delaying marriage, moving out from their parent´s place or getting a mortgage.
- Above all, a reminder: the students that are the most burdened with loans are those that have a fairly small amount. Sure, a lawyer or doctor might have a huge bill, but community college dropouts will often have a lot more trouble paying back their loans with their much smaller income.
Right now there are two interesting proposals to improve how we pay for college:
- "Pay it forward", or income based repayment. We covered this system in the past, in a blog post. Basically, students can attend college for free, but pay a fixed percentage of their income over a period of time (say, 15 years) upon graduation. As Sara Goldrick-Rab explains in this article, however, the system sounds good on paper, but it is much less progressive that it sounds. "Pay it forward" plans focus on tuition, but this is only a small percentage of the cost of attending to college - room and board and books are an even larger barrier. Implementation would only work if it is universal; without it we will only see a regressive market segmentation. The article is well worth a read - as we often say, there is not such a thing as a magical solution, and "pay it forward" would only work under very specific conditions.
- What is the alternative, then? Sara Golrick-Rab has a bold alternative: a free two year college option. Basically, have public institutions offer the first two years of college for no cost. In a way, we would extend the K-12 system to K-14. You can read her proposal here.
There is, as usual, an often forgotten policy tool that has a lot of potential: work study. Working Poor Families Project just released a new report on how work study is often underused, and how it could play a major role in making college more affordable. You can read their study here.