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May 9 2016

Policy Focus: Solutions to the College Debt Crisis

Hadley Heath



More than 40 million Americans carry student loan debt. Often, parents are still paying off their own loans while worrying about saving for college for their children. America’s student loan debt has become a crisis, totaling more than $1.3 trillion.

The college debt problem – largely created by too much government intervention – needs market-driven solutions. Policymakers should address two distinct, but related issues: the high cost of college (for future students) and debt repayment (for former students).

To bring down the cost of college, policymakers should give students more options for higher education through accreditation reforms and expanded access to online and competency-based learning programs. This would force traditional colleges to compete on price. Schools should also be held accountable for value: If colleges have high levels of defaulting borrowers, those schools should shoulder some of the financial burden. This will help schools focus more on helping students gain marketable skills and to find gainful employment after graduation. Lenders should also be able to compete to offer borrowers the best interest rates for each loan.

For those who already face debt, economic reforms can foster a stronger jobs market and healthier wage growth to make it easier for people to afford to pay back their loans. Finally, policymakers can consider some reforms to the tax code to encourage student debt repayment.

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Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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