Much of what we read these days about massive student debt problems was announced long ago.
Let William Shakespeare warn us. He did it in his play “Hamlet”.
Polonius, an assistant to the king, offers advice as his son Laertes prepares to leave Denmark for Paris to continue his education.
“Neither a borrower nor a lender is,” advises Polonius.
Centuries later, the advice remains sound, and in hindsight generations of borrowers may have wished they had spent more time studying Shakespeare and pondering his timeless wisdom.
What the Bard could not have foreseen is how expensive college has become in the 21st century – or the almost flippant willingness of students to take on heavy debt to fund a college education. There remains an almost unshakeable belief in this country that a college education improves the chances of getting a better job after graduation, despite mounting evidence that this may no longer be universally true.
Fortunately, in New Mexico, the future for students and costs is bright. We are one of only two states in the country where students can attend college for free. The state now offers the New Mexico Opportunity Scholarship and the New Mexico Lottery Scholarship, along with over 25 other scholarships, grants, and financial aid.
However, students from past years in our state still have loan debt.
What is universally true is that college is expensive in this country. There are universities in the United States that cost $100,000 per year and more and we are not talking about medical schools or similar programs that offer higher education and degrees. We are talking about schools where graduates get a simple bachelor’s degree.
But even graduates who land better jobs than they could have had without a degree often face decades of crushing debt because they financed their degrees with borrowed money.
The federal student loans program, which was born of good intentions and once met a legitimate need, has become a debacle that seems impossible to untangle and has left legions of college graduates in debt. But the simple solution favored by many – the government simply canceling all or most of these loans – is a horrible idea.
The process and procedures for obtaining and then repaying these loans have been broken for decades, and fixing it is far from straightforward. The numbers involved in student loans are staggering and almost impossible to grasp:
• Total student debt exceeds $1.7 trillion.
• More than 45 million people are responsible for this debt.
• About 30% of the debt will never be repaid
• Somewhere around 40% of those who hold debt will not graduate
• Nearly 80 million citizens have borrowed money in the form of student loans.
• In New Mexico, outstanding student debt stands at $7.4 billion. It is estimated that the monthly payment for these loans for New Mexicans is $269 per month or just over $3,000 per year. This cuts deeply into a person’s disposable income – and indeed many people will opt for a new car, a better apartment or a vacation rather than repaying a loan taken out years ago to meet a long past need.
When it comes to federal loans, the government is having trouble collecting the money and there is no doubt that the debt is weighing heavily on graduates who may not have fully understood the magnitude of the financial burden that they assumed. But simply wiping these loans off the books is not a viable option.
Besides the loss to taxpayers, such massive debt forgiveness encourages the idea that individuals do not have to meet their obligations, whether personal or financial.
Solving the student debt crisis should start with a plan to make college more affordable in the first place. Beyond that, the government needs to more carefully monitor available loan programs, which are often unregulated and unfair to students.
If the government is committed to providing relief and taxpayers are supportive of the idea, perhaps a system that favors the economically underdog, the most disadvantaged among us, could be implemented in a limited way. But, again, the main culprit in this dilemma is an education system that desperately needs to be reviewed and revamped.