File this one in the “it’s about bloody time” department: the Wall Street Journal is reporting that the Obama administration, in the form of a report issued by the Education Department and the Consumer Financial Protection Bureau, is recommending that “Congress to make it easier for people to discharge a portion of certain student debt by filing for bankruptcy protection.”
So far, what’s being recommended is very limited. It would apply only to private loans issued by lenders like Sallie Mae, not to loans backed by the federal government. Private loans comprise only about 15% of total outstanding student debt.
Moreover, it’s not like the Obama administration is expending significant political capital on this proposal, at least not yet. All they are doing is “urging” Congress to consider it. It remains to be seen how hard they push for this thing, let alone whether they can get it through Congress. Still, even Sallie Mae supports a version the proposal; they agree that student loans should be be dischargeable for those people “who have made a good-faith effort to repay their student loans over a five- to seven-year period and still experience financial difficulty.”
Much, much more needs to be done to contain, let alone reverse, the burgeoning student loan crisis. Federal student loans should also be dischargeable in bankruptcy, of course, and that’s just for starters (though admittedly it would be much more difficult sell, politically). A far greater proportion of state and federal student aid needs to come in the form of grants rather than loans — as it once did. Loan forgiveness programs, perhaps in exchange for working a couple of years in public service jobs, should be far more widespread. Colleges also need to reduce skyrocketing tuition costs; among the ways they could do so would be to trim their administration-heavy payrolls and cut the exorbitant salaries of college presidents and other top administrators.
Finally, we really need to inject the notion of tuition-free public college into the public conversation. A college education at a public institution should be free of charge to anyone who is academically capable of doing college-level work, in exactly the same way that grades K through 12 are free. It wasn’t so long ago that, for example, that many large public university systems, like the University of California system and CUNY in New York, did not charge tuition at all. In today’s economy, a college degree is as vital to economic security as high school diplomas were in the twentieth century. It’s high time we as a society accept this fact, and the 1 percenters start giving back to the country that has given them so much, by paying taxes at a level that would support vital institutions like public universities. I would not expect them to do this out of the kindness of their hearts, but if they care about building a thriving economy and a workforce that will be able to meet the challenges of an increasingly complex and competitive world, it’s something that must be done.