New Stimulus Package Doesn't Include Student Loan Debt Relief ASAP?

Political Stunt? Yes. Pipedream? Yes. Worth dreaming though? Yes.

Sen. Elizabeth Warren (the co-author one of my favorite books, “Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke“) is rallying the base into a frenzy as candidate dangle money carrots to the audiences. Again.

This is a repeat of 2019 and I’ve seen this story.

Full disclaimer: I have over $90,000 in student loans. I made peace; they shall be with me for a long time. Much to my surprise, Sen. Elizabeth Warren is still proposing to cancel $50,000 worth of student debt (see her original 2019 letter, here).

Table of Contents

Key Points

95% will walk away with a portion of their student loan debt canceled.

For more than 75%, the entirety of the debt will be erased.

Anyone making more than $250,000; you guys are super-rich, go away.

Debt relief would help out Black and Brown communities the most, north of 80%.

Worry not white students is close to 73%.

Thoughts and Perspective

Student Loan debt is the definitive crisis of the millennial generation. There are Federal student debt relief programs that exist for those in public service-related jobs (ie Federal employment) and the military, however, millenials are way behind on student loans.

We simply do not understand it.

Getting into student loans was easy. Most college students were not equipped to understand the magnitude of these long term decisions- emotionally, logically, or financially.

And worse, tons of millennials are out to brunch, ignoring student loans.

Currently, student loans have ballooned from 15% to 20% due to post-graduation student loan deferment (my student loans grew by $10,000 without me noticing).

Many can’t find work in their field and are stuck in a perpetual case of arrested development and structural unemployment or underemployment.

Student Loan debt is the definitive crisis of the millennial generation

The issues are pervasive and must be tackled in various ways. Tweaks being discussed:

1. Instituting a universal Federal forgiveness program

Firstly, this would require everyone to consistently pay a fixed percentage of their loans consistently over 10 years before having the remainder forgiven (Trump Administration was moving toward this).

2. Requiring employers to institute a policy similar to the NFL’s “Rooney Rule“ for recent college grads applying for jobs in their field.

This would benefit jobs; the added energy and potential for long term employees would limit turnover and increase organizational loyalty.

As such, college grads would also benefit from diminishing the stigma of “lack of experience” for entry-level jobs.

3. Eliminating ineffective college courses within the major’s curriculum.

This would allow students to spend a larger percentage of their time, actually learning their major. This is a Win-Win for society. Consequently, spending at least 80% of students’ class time and experiential learning can lead to greater innovation and expertise. We could even go as far as to limit available majors at university versus students choosing areas with little to no growth in upcoming years.

4. Requiring college students at public universities to apply for and secure a major-specific internship or job by the beginning of their senior year of college.

Although, making this requirement incentivizes students to attend Ivy League schools or those with connections that lead to higher-paying networked job prospects- which would negate the tuition cap by proving they have high placements, which may simply be due to alumni connects vs performance.

However, we will cross that bridge when we get there.

5. College Tuition Cap

capping the cost of tuition at public institutions. Caps would be based on metrics/thresholds pertaining to the school’s performance.

Schools wanting to increase the amount of their cap should be required to demonstrate increased performance across thresholds pertaining to job placement, graduation rates, and other metrics used to determine the educational quality and alumni success.

College tuition has continued outpacing the rate of inflation; while from 2000-2008 median incomes increased by 0% in the US, tuition increased by an average of 5%.

6. Lowering collegiate “administrative bloat“.

College costs have increased due to millennials preferences that have little to do with focusing on their major.

Today’s skyrocketing college costs – between $80,000 and $180,000 for a public or private four-year degree, respectively – and the mounting $1.3 trillion student debt crisis have brought universities’ spending under increasing scrutiny. In 1990, there were approximately twice as many full-time faculty at public research institutions as administrators. In 2012, the two groups were nearly equal.

7. College students seem to throttle at about 4-6 years in undergraduate studies whereas coursework could be crafted for 2.5 to 3 years.

This leads to an increase in student loans, delays in entering the job market, and unrelated educational expenses such as food, housing, utilities, and more.

8. Colleges could offer more merit-based scholarships for high demand fields

This would provide targeted workers guaranteeing support of the job market, and incentivizing students to take roles we need in our economy rather than purely their preferences.

Conclusion

No matter how we cut it, Student loan debt is a major issue and like most things in America; we don’t worry about it until it collapses. The timer is set for 2023.

My math assumptions said 2024 (give or take). There is a camp of people that this message resonated with. However, I have my doubts about any level of implementation. And just like that, the detractors (aka the haters) are coming with their own reports.

Next big announcement on the Senator’s plate to “Make free college universal by covering all tuition and fees for students at public two-year and four-year colleges.”

In conclusion, the people will rejoice (again) for the next carrot but it will also fade back to reality. If you are seriously trapped and wanted some options, read this The Magic Number for Million Dollar Millennials. Until the bill passes, student loans are here.

You can always budget?

In summary, this topic discussed at length with Ecclesiaste Guerrier, University Operational Administrator because he is a strong supporter of Educational Reform, and edited by Christina Michaud, because she is clutch and likes to read.