August 28, 2023

Career AdviceCulture

Instead of Canceling Student Loan Debt, Make It Easier to Pay Off

By: Frances Floresca

The Supreme Court’s recent ruling that the Biden administration’s student loan forgiveness plan was unconstitutional is a win for fairness and taxpayers. 

Canceling student loans is not really a solution at all, and it really is a transfer of wealth from the middle and working classes to the upper class and wealthy people. It is a slap in the face to those who had scholarships, paid off their loans, made financially savvy decisions about where to go to school, and graduated from college without debt. 

I consider myself to be very blessed and lucky to have graduated with no debt. My husband also never finished college but also has a great career and has experience serving in the U.S. Army. Nonetheless, there are still people who are not as fortunate as we are. 

While student borrowers should be on the hook for their own debt, there are free-market solutions and ways to encourage elected officials to roll back regulations to make it easier for students to pay back their loans without wreaking havoc on taxpayers. 

There also are many unintended consequences to having the government cancel it. A 2017 study by the Federal Reserve of New York found that the “average tuition increase associated with expansion of student loans is as much as 60 cents per dollar.” 

Many of us should agree that college should not be as expensive as it is, but we should not necessarily shame everyone who has taken out loans. Of course, there are several solutions that can help ease the burden of student loans. 

One of these are Income Share Agreements (ISAs), introduced by economist, Milton Friedman. With these ISAs, students would be able to work with investors and lenders, where they receive a fixed amount of money. They eventually pay back the loans based on a fixed percentage of their income after graduation. 

Companies can also help pay off loans as part of their recruitment process for new employees

While the above are excellent solutions that are widely discussed, they are not meant for everyone, but they are innovative solutions to ease the student loan burden. 

However, there is an overlooked issue and solution to ease barriers to pay off student loans affecting more graduates around the country: Occupational licensing. 

From the 1950’s to the 2020’s, jobs requiring occupational licenses increased from 5 percent to 22 percent. There are also civilian jobs requiring driver’s licenses. 

In California, Hawaii, and several other states, you can have your work license be taken away if you cannot pay your student loan debt. In some states, you can even have your driver’s license taken away. 

Florida, Kentucky, and Alaska have prohibited license suspensions for those who cannot pay their student loan debt. More states have been working on legislation to get rid of this law. 

In 2020, the Ohio Board of Bar Commissioners denied a woman a license to practice law because of her student debt. She and her husband had a combined $900,000 in student loan debt. 

Imagine spending over $200 each time you took the Law School Admission Test (LSAT) along with other fees. After getting accepted into a law school, students on average spend tens of thousands of dollars. 90 percent of law students take out loans, according to an American Bar Association study. 

Preparation for the board exam can cost around $2,000 to more than $10,000, along with fees ranging from hundreds to to the thousands of dollars for the exam itself. 

The U.S. Department of Education’s College Scorecard found that law school students rank high in taking out the most student loans, having 4.3 percent of the debt and taking out $119,286 on average. A majority of careers listed also require occupational licenses in order to work. Depending on the state and career, occupational licensing costs can also be expensive

How can someone pay their loans if that person cannot work? The government has been trying to find solutions to the student loan debt crisis, yet they take away many workers’ means of paying off those loans. 

States that revoke licenses just because someone cannot pay off their loans, should eliminate these archaic and cruel laws. 

The federal government, especially under the current administration, always talks about eliminating student loan debt. If the administration is serious about it, it should consider suggesting that states stop revoking licenses for non-loan payment. 

We need to ease the burden to help students pay back loans by reducing licensing barriers, but we cannot have taxpayers be on the hook to pay off debt for others.