The student loan debt many Americans are dealing with in their twenties, thirties, and forties could plunge our economy back to recession levels seen during the housing crisis that began in 2007. Many financial experts have concluded that the “student loan bubble” will burst within the coming decade.
We may have reached the point of no return on the eventual defaulting on these loans, and therefore we must put in place a plan of action to deal with the inevitable fallout; we must come together, regardless of party. We need a national response.
I have a non-partisan, three-part plan to address this issue. This plan has three simple objectives: better cost management in higher education, student loan reform, and spurring economic development.
One of the major barriers to students either entering university or completing their degree is the cost. In this proposal, universities would be required to release tuition projections for five years. Students would enter into a nine-semester tuition contract, agreeing to stay at their “home institution” and complete their undergraduate degree within the allotted time of the contract, and universities would lock in their tuition rate for that time. Ensuring that students are better financial managers requires high schools to step up and ensure that they provide students with a mandatory foundational financial management class. Only then will students will be able to budget and be prepared.
The second part of the proposal is rooted in reforming the student loan system. The Secretary of Education would create a student-led commission tasked with providing a set of recommendations regarding items such as the percentage of student debt dischargeable in bankruptcy, repayment plans, loan rates, and new grant formulas. These recommendations must be provided within 180 days of passage of the legislation.
Lastly, we must ensure that we are setting up our graduates for success, through economic development. The federal tax code should be amended to provide all graduates from 2021 onward with a $2,500 yearly homebuyer credit to those residing in federally designed opportunity zones. Applicants must commit to living for a minimum of five years in the opportunity zone and an additional five years in the state. If they decide to leave, they then must repay the government these earnings.
Tackling the issues of university costs, student loans, and economic development will dramatically improve the quality of life for millennials and the next generations, and in turn the future of the nation. Our policymakers in Hartford and Washington need to stop looking at problems in isolation, and through the rose-colored glasses of political affiliation, and take a more holistic approach.
John Board is Western Connecticut State University’s former Representative to the Connecticut Board of Regents.
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