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Charles Littrell's avatar

There are many obvious steps that could be taken to improve the student debt situation, but Americans seem to have lost the knack for obvious policy reform. Three changes that would help:

1) Reverse the special status of student debt as not subject to bankruptcy relief.

2) Imitate the Australians and make debt repayments contingent upon income.

3) Student loan interest rates used to be much cheaper than other debt, and now is often much more expensive. Drop the rate to something like inflation plus 1 per cent, with a 10 per cent cap.

Leaving debt aside, if you want to "go big or go home" in higher education: make junior college and vo-tech programs free (or repayable through contingent income) across the country.

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Kerry Landon-Lane's avatar

Excellent piece, Zaid Jilani. Well making the case that student debt forgiveness is a particularly lousy return on the dollar. And, includes additional downsides.

Some others come to mind. A good chunk of that $50,000 per student would indirectly move into the pockets of schools themselves relieving pressure for their reform to get costs in line and provide a better service. Politically it's an awful path for the Democrat to venture down as it reinforces the half truth that the party is all about the university elites -- remember that Elizabeth Warren lost horribly.

Containing the relief package to covid keeps its strength while extraneous stuff weakens it -- as well as further legislation. Note however, that we can certainly learn in the process what can possibly work more generally and in non-corona times -- to change our world for the better.

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