By Sonny Messiah Jiles | word in black
(WIB) – There is a huge albatross or weight around our children’s necks as they enter the workforce, burdened with student debt that affects the quality of their lives.
Education is the biggest investment most Americans make in their future. At the encouragement of society, school and parents, the goal is to acquire a college education with the thought of establishing financial security and a lifestyle of comfort and prestige: the purchase of a house, a holiday and money in the bank.
Instead, too many college students are constrained by the constraints of repaying their financial obligations and avoiding the negative impact on their credit.
It’s time for a new game plan to tackle this monstrous problem.
One in 7 Americans (13.5%), or 45 million Americans, has student debt, according to an analysis of US Census Bureau data from January 2022. Those aged 25 to 34 are most likely to have student debt. studies, but it is the 35 to 49 year olds who owe the most.
Believe it or not, there are debates about the actual amount owed. The federal government reports more than $600 billion, while the Federal Reserve Bank of St. Louis suggests that the collective amount of federal and private student loans in August 2022 is closer to $1.75 trillion. Let me repeat that number – it’s “B” for $600 billion or “T” for $1.75 trillion. WOW!
According to US News and World Report, the average student has increased their borrowing by 25% between 2009 and 2021 because tuition fees have increased faster than household income and have tripled since 1980. Essentially, we continue to dig this deeper and deeper hole with very little foresight to correct this destructive course.
The student debt burden is having a devastating impact on the black community as it widens the wealth gap. A study by Professor Constantine Yannelis of the University of Chicago found that “the average wealth of a white family is $171,000 while the average wealth of a black family is $17,150. The racial wealth gap is therefore $153,850.
That same study found that the average student debt held by a white family is $6,157, compared to $10,630 for the average black family. It doesn’t take a rocket scientist to realize that if you’re making less money but borrowing more, you’re destined for a long, uphill battle.
There is also an economic impact on America when students do not repay their loans due to poor jobs or lower paying jobs. Guess who takes the note? Not the schools, it’s the taxpayers.
President Joe Biden’s student debt relief proposal, with its three-part plan and up to $20,000 in relief, is a step in the right direction and something is better than nothing. But we have to look at this issue holistically.
Some people talk about managing student debt instead of finding a solution, or offer lower interest rates or universal loan forgiveness.
Then there are the suggestions of offering free tuition at community colleges, which, by the way, would increase enrollment by 26% and increase graduation by 20%. Others refer to free college/university education as in European countries.
The concept of free tuition claims that debt-free graduate students would earn, save, and invest more, potentially boosting the economy. The downside, say opponents of free college, is that it is expensive (but public education is free), the wealthy would benefit more than middle- and low-income families, and there would be more more graduates and fewer jobs.
Again, it’s time for a new game plan.
When we look at US initiatives that have worked successfully in the past, I think of the GI bill, legislation that offered a slate of benefits to some of the veterans of World War II, or the New Deal under President Franklin D. Roosevelt. centered on the “three Rs” – relief (for the unemployed), recovery (of the economy through federal spending and job creation) and reform (of capitalism, through legislation).
What if we created a new student debt program based on these two programs of service to our country, not just in the military, but in education, mental health, rebuilding our infrastructure, and more? It’s not a new or novel idea, but I think it should be pursued.
The reality is that if we continue on the current path, we are only digging a bigger and deeper hole for our future leaders to overcome. This is unacceptable.