Many theories abound when it comes to fixing the problems of student loans in America. Many Americans are saddled with massive student loan debts well into the establishment of their careers.
June 2012 saw a panel of finance experts confront the problems of student loans at an event sponsored by the American Enterprise Institute. Panelists included:
- Richard George – chairman, president, and CEO of the Great Lakes Higher Education Corporation
- Art Hauptman – independent policy consultant specializing in higher education finance
- Edward Pinto – AEI scholar focusing on housing and financial policies
- Alex Pollock – AEI scholar focusing on housing and financial policies
Ohio University economics professor Richard Vedder moderated the panel; former Secretary of Education (under Ronald Reagan) Bill Bennett gave a presentation to open the event.
What solutions are there to massive student loan debt and high default rates? Here are some ideas from the experts on the panel:
- Higher education institutions need to have “skin in the game” – in other words, they need to have more responsibility or accountability for students who default on loans. Perhaps schools could be made to pay a penalty if their graduates default on student loans. It might encourage higher education institutions to be more involved and aggressive when it comes to helping recent grads find careers.
- “Vulnerable cohorts” – students more likely to drop out of college and/or default on their student loans – need to demonstrate dedication and persistence towards finishing a degree before they are allowed to take out student loans. Until the vulnerable cohorts are allowed to borrow, the schools themselves could carry the cost burden for their students.
- Higher education institutions need to be subject to higher levels of scrutiny – more like the attention given to primary and secondary schools (K-12).
Is there a right answer? Would these ideas work singly, or would they work best in concert? The high default rates and massive amounts of student loan debt in America say that the current way doesn’t seem to be working anymore.
The American Enterprise Institute for Public Policy Research was founded in 1943 as a nonpartisan, independent, nonprofit organization with a mission of defending “the principles and improve the institutions of American freedom and democratic capitalism – limited government, private enterprise, individual liberty and responsibility, vigilant and effective defense and foreign policies, political accountability, and open debate.” AEI has participated in social and cultural studies (including education policy studies) since the 1970s.