If you haven’t heard by now, the student loan crisis is beginning to spiral out of control, with a total student loan debt in the US of roughly 1.3 trillion dollars. That is an astronomical number and it is quite frankly, ludicrous. In fact, the average four-year degree student graduates with roughly $30,000 of total student loan debt.
It is no surprise that many people wonder if the student loan programs are taken seriously or if the relief provided to student is enough. We always here about how one person wants every student to attend a public college for free or how the next person wants to completely eradicate all student loan debt. But, when you sit down and actually think about these things, it seems like there is no true solution in sight.
One thing that everyone must keep in mind is that as the cost of tuition goes up, the more student loan debt there will be naturally. Not all students can attend school without having to take out a loan, although it would be nice. In addition to that, many students are unsure of how student loans work and they end up taking out too much money and are surprised when they receive the bill. But can this truly be fixed?
Bush’s Plan in Detail
Jeb Bush has announced his plan to handle this crisis and he has a lot of followers on board with his ideas. The first section of his plan includes reworking the federal loan program that has confused many students since its inception. He wants to introduce a new model that would be income-based. This means that students would only be able to borrow based on what they can afford to pay back. This would then eliminate the student who ends up only making $30,000 from owing the federal government $65,000 in student loan debt.
Basically, the way this program would ideally work would be to give each and every student a $50,000 credit line that they can use for college or skill based programs. This credit line would be a lifetime line and the amount you borrow would be paid back in a different fashion. For example, if you access the credit line, you would pay back the amount you borrowed plus one percent for every $10,000 you used. The money used to pay back the government would come from the students’ future income taxes for 25 years after their date of graduation. It is not clear if Jeb Bush would recommend changes to private school loans which are different than federal student loans.
Bush would also allow low-income students to continue receiving the grants they need. In addition, students could transfer their current debt into this new program.
The next section of Bush’s plan would involve a system that holds universities partly responsible for loan debt that their students take on, defaulted loan debt specifically. The program, once in place, would require universities or colleges to pay a portion of a student’s defaulted loan, thus making it a shared risk and not placing all of the risk on the student only.
Lastly, Bush’s plan would also create programs that are low cost to students. This means that those once expensive exam fees or assessments will no longer be as expensive as they once were. This will allow students a fair opportunity to study and take the exams they need to further their education.
Will It Work?
The plan has some great components to it, but whether or not it will work is uncertain. The $50,000 lifetime credit would be enough for most students, but what happens if you use up that amount and do not receive your degree. Many programs such as law degrees and medical courses cost a lot of money and $50,000 is not nearly enough to cover those funds.
Being able to pay back your loans through your income tax return could be a great idea as it eliminates you having to reach into your pocket and try to find the funds each month to make the payment.
If you are ever worried about not being able to make a student loan payment or you are struggling to afford your payments, speak with your loan provider today. There are many options available to students.