Student loan debt in America eclipsed one-hundred trillion dollars last week. Every single Millennial is likely out of college and has received their undergraduate degree by now. The deferring of interest on their loan is coming to an end, and the payments have begun to balloon. America’s grandest lie has come to life, and it has unleashed pure hell among millions of America’s workers.
How did this happen? Our educators, counselors, politicians, and companies told us we had to go to college. They informed us that if we didn’t go to college we would never amount to anything. The said we would likely live a life of poverty, and fail to reach the American Dream. Well, we have all begun to wake up from that dream they promised us, and it’s an inescapable nightmare that presents itself with no way out.
You see, our parents got parachutes when the mistakes from their decisions around debt ballooned too high. They over leveraged themselves, purchased homes they couldn’t afford, and were given reprieve during the Financial Crisis post-2008. The Home Affordability Refinance Program was presented to them, and when it wasn’t as effective as originally thought, they were given another program with additional provisions to help.
What did HARP 1 and 2 do for our parents? Well, they couldn’t afford their homes because they failed to realize what ARM meant when they took out their loan. ARM stands for Adjustable Rate Mortgage, but they didn’t have time to research that. So, the Obama Administration approved HARP. It enabled our poor, manipulated parents to refinance their rates on the mortgage to something reasonable. This drastically reduced their payments and enabled them to stay in their homes. Why was there HARP 1 and then HARP 2? Well, HARP 1 didn’t take into account that most of the homes were underwater, or worth less than the loan. HARP 2 enabled banks to overlook this, and still offer homeowners a refinance, regardless of the appraised home value. How kind!
Why is this relevant? Well, it matters because our politicians have literally acted like student loan debt doesn’t exist. Obama didn’t extend an olive branch to the millions of impacted graduates, nor has Trump. Senator Sanders campaigns on free tuition, but fails to speak about helping those of us already struggling with our current tuition debt. The banks don’t mind, either. You see, you cannot write off student loan debt, or rid yourself of it in bankruptcy. You are literally married to your debt, and you cannot get a divorce. How fantastic!
OK, what are the options? Well, there are a few ways to fix the problem. First, the interest rate. Banks barter with people all the time about their unsecured debt. Why? They have nothing to repossess, such as a home or car. Those loans are secured. Therefore, the bank threatens to take the item away from you. Student loan debt is unsecured, because the bank cannot rid your mind of what you learned. This leads to our first possible solution, which is interest reprieve. The loan has a principle balance remaining, as well as the cost to pay it down, which is the interest it will accrue over time. Banks can extend borrowers a holiday from interest, to which the Federal Government can give banks the lost income to keep balance sheets whole. It is a bailout, but not an entire forgiveness of the loan. It is a way to help speed up payback, and lessen the difficulty.
Another way to fix the problem is with the principle owed. A huge problem in our country is our government’s inability to pay Millennials Social Security when they retire. The entitlement program is likely insolvent within a decade. Again, another problem our politicians don’t speak about. This problem amplifies with most Millennials having nothing personally saved for retirement. What if you could fix both of these problems with a creative solution to student loan debt forgiveness?
Each dollar a Millennial puts toward retirement equals a dollar they are forgiven on their student loan debt. Provide these people with the ability to rid themselves of their debt by increasing the amount they put away for their retirement. What if the Millennial has no student loan debt? Then, offer them the chance to offset other debt, such as home, auto, or credit card. In the case they have absolutely no debt, then give the person additional tax credits. Again, this helps ease the debt burden, while then increasing the amount of saving. It is an actual long-term investment in our people.
The third way to fix the problem is through an incentive-based system. Provide the debtors a solution to debt forgiveness through the career path they have chosen. For example, each year they stay employed within their industry, they are given a pass on the debt owed for that year. For example, a graduate is working in finance, and has a monthly loan payment of $400. The entire year passes, and the graduate remained employed. Offer the person the ability to be forgiven for the entire year’s liability. This keeps the person employed, and rewards the consistency. It is a simple fix, encourages employment, and avoids wastefully throwing money to solve the problem.
All three solutions presented are ways to tackle one of America’s largest problems. The only way the issue is addressed is if voters express to their politicians the need for such a program. Politicians are all populists looking for votes via an attractive item they can give you. The only way a politician will offer Millennials student loan support is to begin expressing the need. There is only so much money to go around, and only so much time in a speech. This can become a top priority, but only if it is requested.
It is important to discuss the impact the student loan debt has had on the personal life of someone affected. Countless studies have shown that the debt burden has resulted in delayed home ownership, marriage, and career advancement. The mental anguish from the debt is very real, and it cannot go unnoticed. It has created a type of indentured servitude afflicting millions of Americans. They are trapped, and they have no lifeline to get out. It would be interesting to see how a student loan burdened Millennial would respond to this question – Would you spend a month in jail to forgive a year’s worth of debt payments?
In closing, imagine the economic productivity America stands to gain if the millions of debt-burdened Millennials received a bailout of their own. They would have the means financially to direct their earnings elsewhere, as well as a newly-cleared head that is rid of the anguish from their tumultuous debt. America has a history of extending lifelines to its citizens. The GI Bill, the New Deal, the Homestead Act, and Reparations are all examples of times that our government extended an olive branch to its citizens in need. Why not solve the student loan crisis with similar legislation?
Phil Your Day 