Student debt continues to climb. Here are 3 ways to fix it.
LendEDU’s fifth annual Student Loan Debt by School by State Report, which analyzed average student loan debt figures for the Class of 2019 at 475 colleges and universities, was recently released and unsurprisingly found student loan debt on the rise throughout the United States.
For the Class of 2019, the average student loan debt per borrower was a substantial $29,076, which is up by $511 from last year’s report. 55% of all graduates from this class also left campus with some amount of student loan debt according to the LendEDU report.
On a state level, average student loan debt per borrower figures were bloated in Connecticut ($41,579), New Hampshire ($41,511), Pennsylvania ($38,521), Delaware ($37,447) and Maine ($36,339).
When it came to specific institutions, debt per borrower figures at New York School of Interior Design ($65,401), MCPHS University ($58,012) and Immaculata University ($55,126) were shockingly high.
Enough is enough. This country’s outstanding student loan debt balance sits at $1.67 trillion, and the crisis must be reversed now before millions of young Americans, who have now been thwarted by two recessions, are left behind.
There are three solutions that can help catalyze the reversal.
1. Colleges can make virtual learning a permanent option and reduce its price.
In light of the coronavirus pandemic, we are beginning to see a virtual takeover of education that perhaps has come quicker than expected because of the unprecedented situation. Some students and parents have warmed up to the idea of attaining a bachelor’s degree in a virtual classroom after being forced into it for the spring 2020 semester.
Colleges and universities should lean into this modern way of learning but do so at a cheaper price. They should make a virtual undergraduate experience a permanent option even after the pandemic has finally passed. And, they should make that option a lot more affordable than the traditional, on-campus experience because it’s obvious the two learning experiences are not the same and should not be priced the same.
For students that opt for the cheaper online route, they will not need as much student loan debt to complete their education, which will begin chipping away at this country’s outstanding student loan debt balance.
2. Legislators can hold colleges accountable when they have a history of high student loan debt.
A system of accountability amongst higher education institutions has actually been discussed as part of the proposed reauthorization of the Higher Education Act, but like most things in Washington D.C., no results have come of it. Such a law would entail holding certain colleges and universities accountable for a history of high student loan debt and default levels. If an institution continues to rank poorly for these two metrics, they will then be forced to repay a portion of student loan debt held by all former borrowers.
Perhaps then college officials will be more hesitant to continue raising tuition, and maybe they will even begin reducing their obscene prices.
3. Legislators can also cap how much debt a student can take on.
Finally, a nationwide cap should be implemented on how much student loan debt a college student is able to take on to attain their bachelor’s degree.
There is no reason that any college student who is barely old enough to drink should be leaving campus with six figures of debt that will take multiple decades to repay.
Instead, borrowers at any U.S. higher education institution should only have to take on a maximum of $40,000 in student debt for their bachelor’s degree. Any costs exceeding that cap will have to be covered by the colleges and universities themselves.
Fixing student loan debt in this country will be an uphill, prolonged process, but by implementing the three fixes above at least we can get started.
In his role as Director of Communications at LendEDU, Mike Brown uses data to identify emerging personal finance trends and tell unique stories.