The fairest way to solve the disastrous student debt problem in the United States

FINANCIAL CAPITULATION BY MILLIONS WILL OCCUR UNLESS WE ACT

Many economists and politicians like to celebrate the fact that unemployment is low.  While that's great, celebrating low unemployment while ignoring the larger problem of personal debt is whistling past the graveyard or deliberately not dealing with the real issue for most of our country's citizens.  The issue isn't jobs; the issue is DEBT.  Most Americans are swimming in it.  This tsunami of personal debt has overwhelmed millions of Americans and has undermined our national economy.  We have become a nation of large numbers of citizens living paycheck to paycheck.  The ability to own property or to even realistically pay all of one's bills is becoming increasingly difficult.  The fact that people can get jobs is, of course, helpful, but getting or having a job does not solve the problem of excessive financial debt.

The problem of debt is particularly problematic for college students and college graduates, millions of whom must borrow significant sums of money to attend college or university.  Student loan debt is particularly insidious because borrowers cannot use bankruptcy laws to help them get out from under from their school debt.  This is a huge and growing problem for our society as it means, in the end, that millions of young Americans will be saddled with crushing debt that they will carry with them to the grave and beyond.  While the wealthy of this country may be indifferent to the burden these young people must carry with them, it is a problem that ultimately will affect everyone, as the national economy will ultimately collapse if nothing is done to ameliorate the problem.  How big of a problem is it?

According to Zach Friedman of Forbes Magazine, student debt in the United States  in 2017  was  $1.3.TRILLION,  Two years later, that number has ballooned $1.56 TRILLION and, of course, that number will rise each year by at least $100 BILLION due to additional students borrowing money and the service on the debt itself.  Currently, the average interest rate exceeds 6% while the current average monthly payment by loan recipients is $393 and rising.

Some politicians, including Bernie Sanders and Elizabeth Warren argue for colleges to be free.  This is both unrealistic and ultimately unfair to those who would ultimately foot the bill.  Clearly, since not everyone goes to college and many have already been to and been fortunate enough to pay for college, the idea of giving students "something for nothing" is not palatable to a majority of the country.

The more reasonable solution to the student debt crisis is the 2% solution.  Specifically, the idea is to loan all college students money for school (room and board at accredited institutions of higher learning) at a fixed rate of 2% or the inflation rate as determined by the United States Bureau of Labor Statistics.  By setting the loan rate to match inflation, students would literally pay for college what they spent on college, rather than pay for college PLUS usurious rates which overwhelm both college grads and non-college grads alike.

The 2% solution would require ALL student loans to be pegged at 2% or the current inflation rate, whichever is higher.   In this way, the government and private banks would be loaning students money to go to school but not "making money" on the loan.

The only "losers" of the 2% solution would be private banks who currently make billions on student debt AND late payment fees and penalties that no one is allowed to walk away from.

Those who argue that the private banks should be allowed to charge  (some charge as much as 14.24%!) whatever they want to students need to be reminded that ultimately when significant numbers of students default on their loans (and this will happen at some point in the near future - 2025 or before) those same banks will appeal to the United States government for a bailout similar but far greater in scope than the great bailout of 2008.

The young people and college students of tomorrow are getting buried in student debt.  As a nation, we have the opportunity to fix the problem before a generation is overwhelmed and there is total capitulation by millions of hard working people.  Before our nation reaches the breaking point, politicians need to consider the 2% solution.  Unlike politicians who would promise "something for nothing," the 2% solution is a fair way to ensure those who want to obtain a college degree or higher have the opportunity to do so without the eternal burden of massive, crippling debt.  Politicians from both sides of the aisle would do well to consider that each day the student debt crises grows, the nearer society gets to mass financial capitulation.  Let's avoid the disaster that awaits by making college affordable and accessible for all.