Sands: More Money, More Problems
by Maggie Sands
1,000,000,000,000. It’s a number we’ve all heard in the media: student debt in the United States has surpassed one trillion dollars. As the cost of college—even that of the net price—continues to rise, schools are giving more institutional grants; but, at the same time, low-income and middle class families are forced to take out more loans to pay for higher education. However, the problem is not so much in the amount of debt students have, but instead in how this debt is repaid. There is an inevitable connection in which as the number of government loans increase, the number of defaults on those loans also increases. Since the cost of college does not seem to be decreasing any time soon, reform measures should be focused on student repayment of federal loans in order to decrease the number of defaults.
One of the upcoming reforms to tackle what some may consider a student loan crisis is the proposal of income-based repayment. In this method of expunging student loan debt, students are given ten years after they graduate to repay their debt as a certain percentage of their income each month. On the surface, it seems as if a crisis has been averted—in a month, a person will never be asked to pay an amount that they do not possess because it is always a percentage of their earnings. And what if someone can’t pay off his or her loan in ten years? Those who complete their payment before the ten years end continue to pay to make up for those who can’t. If it sounds too good to be true, it is. Two major aspects of this proposal that I believe require consideration include the decision to set a concrete timeline for repayment as well as the method’s effect of students’ choice of major.
In the current proposal, a strict amount of time (10 years) is outlined as the period in which students must pay back their loan debt. Since repayment is based on a percentage of income, graduates who make larger amounts of money may repay their debt before the ten years is over, and low-income graduates may not be able to pay off their debt in ten years. The proposed solution to this issue is that even after full debt is repaid, previous debt-holders must continue to pay a percentage of their income for the entire ten years in order to make up for the lost repayment by low-income graduates. However, high-income graduates would likely not approve of paying for someone else’s debt if they have already paid their own. If people dislike the idea of paying for someone else’s education debt, it could be suggested that loan debt is still paid back based on income percentages but without a strict deadline. But in this case, low-income graduates could be in debt for the rest of their lives. Both of these options have pros and cons, and while this is an ideologically charged issue with disagreements in opinion from either side of the aisle, the greatest questions that this issue raises is that of education as a societal good.
Early in American history, it was believed that education was essential for the political health of the country. However, today that topic is debated. Some argue that it is important to have an educated public—we do, after all, mandate education until a certain age and have public schools funded by taxpayers’ money. Although free education ends with high school, the government does provide federal aid and loans to students for higher education. In one respect, if taxpayers already pay for education across the country, how different it is for previously indebted graduates to continue to pay off someone else’s debt? At the same time, some people find education to be a private benefit as it is about the discovery and production of new information, with the goal to make one’s mind an interesting place to live for a lifetime. If this is the case, then people would argue that the sacrifice they make for their education is purely their own, and they should be responsible for compensating for any borrowed money. Because the issue of education as a public good is so contested, it is difficult to determine whether others are responsible for paying for the debt of others.
Additionally, when considering the prospect of income-based repayment, there is the potential for an adverse effect on students choosing majors. There is argument today that students going into college are too career-driven and aren’t enjoying higher education for the experience and love of learning that used to convince students to attend college. Decades ago, students chose majors that fit their passions and took classes that genuinely interested them. However, today that is not the case. There are articles all over the internet with headlines such as “Highest Paying College Majors” and “To Make the Most Money, Major in This”, suggesting that students’ top priority is to graduate with a high-paying job. If income-based repayment includes a strict amount of time in which graduates pay back their debt, students may gradually begin to more frequently choose majors because they are passionate about them rather than for the salary they will grant them after graduation because there is less pressure to pay off the entirety of their student loan debt. However, this could result in less high-paying careers and therefore less extra money to offset the cost of low-income graduate debt at the end of the ten years. On the other hand, if graduates are given a lifetime to pay off debt but they must pay it themselves, it would further influence students to pick high-paying majors in order to pay off debt as quickly as possible and reduce the chance that they default on their loan. While it would eliminate passion from major selection, it would hold every student accountable for the debt that they accrue.
There are pros and cons to both the idea of a fixed period for income-based repayment as well as lifetime repayment in terms of major selection and education as a societal good. It raises the question of whether education benefits an entire society, and therefore whether others should aid in paying back a single students’ loan debt. Additionally, this issue questions whether our society is moving to be completely career-driven going into college and whether or not passion should play a role in choosing a major. Income-based repayment has the potential to become a successful reform for settlement of student loan debt, but there are many factors to consider before it can be implemented on a large scale.
Maggie Sands, of the Class of 2018, is from Glen Arm, Md.