This New York Times article by Joseph Stiglitz is a particularly clear explanation of the student debt crisis, along with suggestions of how to fix it. Stiglitz, former chief economist for the World Bank, is one of the most frequently cited economists in the world.
The article references the recent legislation filed by Massachusetts Senator Elizabeth Warren, which would reduce federal student loan interest rates to the same rate at which large banks borrow money – 0.75%. He also suggests we consider Australia’s system of publicly provided income-contingent loans. “Repayments vary according to individual income after graduation. This aligns the incentives of the providers of education and the receivers. Both have an incentive to see that students do well. It means that if an unfortunate event happens, like an illness or an accident, the loan obligation is automatically reduced. It means that the burden of the debt is always commensurate with an individual’s ability to repay. The repayments are collected through the tax system, minimizing the administrative costs.”
There have been many campaigns here against student debt. None has yet gained sufficient traction. This article could be helpful as we consider our next steps.