Don’t just delay student debt, prevent it
The Biden administration this week announced another 90-fold delay in interest, payments and collections on federal student loans. This is good news for tens of millions of borrowers and an important decision, but at best it is a short-term solution.
At worst, we risk treating a symptom when an underlying condition is what afflicts us.
The truth is, we cannot delay or reverse our way out of the student debt crisis in the United States. We need to prevent debt to begin with.
It means thinking holistically about our system and embracing affordable, employer-supported education programs that don’t charge students out of pocket and having a broader conversation about combining high cost with high cost. high quality.
The federal government, including the Biden administration, is doing everything it can to right the wrongs of the past, but it is clear that this is not enough and that a complete solution belongs to the private sector and to a larger solution. .
Student loan debt in the United States has been steadily growing, and it has been exacerbated by our country’s slow recovery from the COVID-19 pandemic. In the USA, there are over 44 million borrowers who collectively hold $ 1.5 trillion in student loan debt. (That’s right behind mortgage debt, and higher than credit and auto loans.)
As the Biden administration’s action to delay payments suggests, many Americans simply cannot pay: 11.5% of student loans are past due or in default by at least 90 days. And this is a recurring problem; in the class of 2018, for example, over 69 percent of students who took out student loans graduated with an average debit balance of $ 29,800.
Using a pen to write off an existing debt or impose a moratorium may provide some relief for a few, but it won’t create a long-term solution. These types of one-off events also tend to benefit a single generation of people.
Student debt is a by-product of the value we place on prestige and “elite” education.
We associate higher cost with higher quality, automatically. It also leads students to make bad decisions – they can go into debt to get an elite degree that doesn’t necessarily match their career goals. Or they may avoid educational opportunities because they fear accepting more than they can afford, which limits their opportunities.
What no one can question is that we need more education and skills: more than 80 million people in the U.S. workforce currently lack a college or skilled education, and they are four times more likely to be dislodged from their roles by impending automation and augmentation. . One of the byproducts of overpriced education and student debt is that they choose to forgo career advancement opportunities.
There are also tens of millions of additional workers who will need more education as our economy changes, our workforce automates and other changes occur. We are doing nothing to serve this group by failing to address the growing costs of education and student debt in our country.
We should be thinking about longer term policies that take debt out of the equation and make it easier to support learners who want to move forward and avoid getting into debt.
My company, Guild education, works with leading employers to provide debt-free education benefits to working adult learners. Some 97 percent of our students graduate debt free. More employers are embracing education and skills benefits, but policy is slow to invest despite strong bipartisan interest in this area.
Earlier this year, we Sense. Maggie Hassan (DN.H.) and Todd Young (R-Ind.) and Representatives Danny Davis (D-Ill.) And Jason Smith (R-Mo.) supported bipartite and bicameral legislation that would increase what employers can pay, tax-free, to help educate their employees. Employers have shown they are eager to contribute more – and employees will benefit from programs that don’t require them to pay anything out of pocket.
This solution is also more sustainable in the long term. According to some estimates, companies are already spending $ 177 billion in education programs. They see longer term benefits in having a more skilled and trained workforce.
And that’s part of a solution that addresses our underlying condition: When finances are lightened and the process reduces risk to students, the only cost students face is time and opportunity costs. .
Of course, this is not the only solution, but it is an indication of the larger way we should think about the problem.
The Biden administration – and Congress – may continue to explore ways to manage student loan debt. But employer-supported education is a long-lasting, additive solution – a very attractive solution and one that reaches potential learners who need education the most.
It’s a way to prevent debt, not just to delay it.
Paul Freedman is president of education technology company Guild Education’s Learning Marketplace.