This morning, the Eau Claire Leader Telegram published my column on the efforts being made by the One Wisconsin Institute to build public awareness of America's $1 trillion student loan debt crisis. An earlier column by fellow board member Kristen Dexter (linked here at the Capital Times in Madison) introduced the topic to Wisconsin readers. Today's column includes ways to advance the issue to ensure relief goes to middle class borrowers first and not to the "too big to fail" crowd.
The column starts below the fold.
Recent news coverage of a study (pdf) done by the One Wisconsin Institute outlined how America's growing mountain of student loan debt, now topping $1 trillion, is doing economic harm we can actually measure at the local level.
This is truly a problem for an entire local economy, not just the households where someone seeks a higher education. We need to start examining how Republicans and Democrats can work together to relieve the economic pressure exerted by the current debt and prevent it from ballooning further.
It would be best to start by making clear that no responsible advocate is asking to welch out on today's debts. People are overwhelmingly current on payments for loans they knowingly signed. What we're finding, however, is that those payments take up such a high percentage of household income compared with 30 years ago that they're hurting local businesses as well. So we should all embrace options that make sure more of the money that's earned in Wisconsin stays in Wisconsin.
Solutions can start with something as basic as making sure future tax relief targets the middle class overall. Goodness knows the big banks that gambled with our mortgage and retirement accounts don't need any more help. They've recovered their 2008 losses and benefitted handsomely from bipartisan votes to gut consumer protections for student loan recipients. (There is no statute of limitations for murder, kidnapping, war crimes and treason. And now, thanks to bank lobbying, student loans are on that same list!)
There is concern that what happened with mortgage-backed securities could happen again, albeit on a smaller scale, with student loan asset backed securities (SLABS). If more families default on student loans and SLABS tumble in value, Wall Street could demand another taxpayer bailout, even though the private sector got what it wanted when Congress voted in a bipartisan manner to deregulate SALLIE MAE. We cannot allow them to once again privatize the reward but socialize the risk.
Finally, prospective student borrowers not only need good career counseling to be assured that their studies can take them to a rewarding career, they also deserve plain English explanations of their loans and the ramifications of extending or defaulting on them. Financial literacy is critical for young people, and anyone who needs to be made aware that debt can be a good thing - for getting that education, that first home, that first car - only when it is done with a realistic plan for repayment.
Although this issue hurts business owners no matter what their political leanings, the fact that it is being studied by a progressive organization has led to some knee-jerk reactions by those whose political discourse is based on almost involuntary verbal spasms about "socialism" wedged between personal attacks.
An affordable quality education for those who want to study hard and contribute to society has never been a partisan issue. It is recognized by both parties as an expression of the American Dream. The nation's unemployment rate for college graduates is still about half the level of those who have only a high school education. A university degree may not be for everybody, but some kind of vocational training, re-training or continuing education is the right path for almost every American worker at some point in his or her adult life. If we keep pricing education beyond the reach of the middle class, the middle class will shrink.
Affordable education is best achieved by balancing many factors, including budget transparency, state and federal support, controlling the cost of health care and keeping institutions accountable for quality and placement. Criticism alone does nothing to reduce this trillion dollar debt.
Our national economy and, as we have discovered, our Main Street businesses are better served when we find the right balance of public, private and family investment in educating people to do the work that keeps America on a course toward creativity and prosperity.