It is estimated that student loan debt exceeds $1.7 trillion.

It is often said that “you borrowed the money, so pay it back.”

Although I can get on board with this sentiment generally, in a small respect, some (a large chunk) of money due is not or should not be incurred to the student.  Hear me out.

The school loan system is a scam.  It was established by the government to subsidize the university system and necessarily hyper-inflated tuition costs.  In a free market–driven system, tuition would have risen nominally over the past few decades, as fewer students would have opted for college, forcing colleges and universities to price their product according to the market, not to the abundance of free money.  This would have also forced universities to operate leaner, rather than create the administrative bloat that we see in today’s college system.

Let me propose two reforms.

One: Make student loans risk-based (like all other loans).  Loans and loan amounts should be offered to exceptional and above-average high school graduates and should be indexed against the employment market for said course of study.  A 3.8-GPA student or above, studying computer science or a STEM major, could qualify for loans up to 70–100% of his college education.  A 3.0-GPA student studying gender/women/Afro-Hispanic studies could qualify for loans up to 30–50% of his college education.

Establish public-private funding alternatives to school loans.  If industries needs plumbers, HVAC, electricians, welders, STEM, computer technicians, etc., they can help sponsor some portion of a student’s education, with the proviso that said student commit to a one- to three-year employment stint with said firm upon graduation.  Likewise, if underwater basket-making companies need weavers, they can subsidize some (large) portion of a particular student’s education expense.

Two: Offer a type of reverse G.I. Bill.  America needs war fighters.  Waive some portion of current student loan debt if said young person enlists in the military or extends into the National Guard.  Besides increasing recruitment, this also serves two subsidiary benefits: It provides a mechanism for improving the health and fitness of said recruits and makes some headway in reversing the anti-America indoctrination acquired at the university.

The current school loan arrangement is a debt trap that doesn’t well serve America’s students.  But it serves the interests of universities handsomely.  

As Einstein stated, doing the same thing over and over again and expecting a different result is the definition of insanity.

Image via Pexels.