Student loan debt: Promises

Many student loan borrowers will begin payments soon, and we've seen many recent news items concerning borrowing for higher education. But should college students be forced into having to borrow?

If the school has “college” or “university” in the title, it's got to be good, right? Wrong.

In the USA Today article “White House issues much-anticipated rule to weed out high-debt, predatory colleges,” Alia Wong reports that a new rule will protect 700,000 students from enrolling at 1700 “lowperforming programs.” Any school that receives federal financial aid has to publish “attendance costs, graduates' earnings, typical borrowing amounts and other data.” A program can be flagged to lose federal funds if it fails the earnings premium test, which “measures whether graduates' median earnings exceed those of someone with a high school diploma only.”

Preventing students from enrolling at a college where they may accrue more debt than they are able to pay makes a lot of sense.

What also makes sense is student loan forgiveness for those who have been paying for years. At the end of September, Nirvi Shah and Alia Wong reported about how 804,000 people had their student loans forgiven. Many years ago, the government offered an option to pay a minimum amount based on salaries with the promise to forgive the rest of the loan after 20 or 25 years. Interest still accrued, so many were stuck with more than the original amount they owed. The Biden administration fixed previous miscalculations to allow the forgiveness. Earlier loan forgiveness included 1.1 million people who had been “defrauded” by their schools, and 175,000 who worked in public service for 10 years.

Here's a look at the numbers. In Minnesota in 2021, the average median debt after earning a bachelor's degree was $23, 858. Of note is that this number doesn't include those who have taken college classes but haven't graduated.

The student loan interest rate is 6.87% for federal loans. In comparison, the rate for a new car in Minnesota is 5.8%.

The pause on student loan debt is over, but as the mom of a college graduate, I worry about that debt. That's why the SAVE plan is a good thing. According to a White House fact sheet, “The SAVE plan is an income-driven repayment (IDR) plan that calculates payments based on a borrower's income and family size — not their loan balance — and forgives remaining balances after a certain number of years.”

Preventing predatory schools from taking advantage of students, helping students pay off their debt according to their income, and forgiving debt are all good ideas.

But even better would be preventing the conditions that lead to the debt. I work at Saint Cloud State University, and I see some students struggle to make ends meet. Perhaps we could better fund higher education in the United States, investing in the schools to lower tuition and adding more grants and work study programs instead of loans.

I'm happy to see that Minnesota is heading in the right direction. The North Star Promise is a scholarship program offering free tuition to qualified Minnesota students attending Minnesota public colleges and universities beginning next fall. This could be a model for the rest of the United States.

This is the opinion of Linda Larson, a St. Joseph resident. She is the author of "Grow It. Eat It," which won a national award, and "A Year In My Garden." Her column is published the second Sunday of the month.