The ‘incredible, horrible and crushing weight’ of student loans

The policy options available to him are fraught with issues of equity, economic injustice and sustainability. Long-term structural change would require a complete overhaul of our current system, not just temporary relief for those struggling with loans. And while political analysts generally agree on the need for reform, determining the way forward is a contentious issue.

People in other developed countries, or even older American generations, have rarely had to deal with the burden of high student debt. In other rich countries, college education is treated as a public good – much like K-12 education is already treated in the United States.

The United States is proud to be a destination for higher education seekers from around the world. But is the tuition associated with this learning something to be proud of? Below, we highlight three systems where college tuition and student loan funding are approached differently, as our colleagues at The Upshot point out.

Australia: Australia has much lower tuition fees than the United States, which can go up to the equivalent of $8,300 per year, depending on the program of study. This translates to an average loan of around $23,500.

Australian borrowers only start making payments when their income exceeds the equivalent of around $33,000. Payments are collected automatically through the tax system and automatically adjust the same way with income – similar to withholding tax in the United States. Students can also choose to pay tuition upfront, but 85% to 90% take an income-contingent loan instead.

Automatically collecting payments based on income is an essential part of a well-functioning lending system, said Rohit Chopra, senior researcher at the Consumer Federation of America. “When borrowers have the choice of repaying through their employer, it removes much of the bureaucracy and distorted middleman incentives.”

Sweden: Swedish universities do not charge tuition fees and universities are funded by government grants. However, many students take out loans to pay for living expenses while attending university, and the average level of student debt in Sweden was around $21,000 in 2018. This is comparable to average debt levels in the states. States, but Swedish students are far less likely to default on their loans, thanks to low interest rates and a much longer repayment trail.

About Judith J. George

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