Student Loans...Should we Forgive? Should we Restructure?

Student Loan Reform from the JimHickeyForAmerica.com platform.

Here are some of the things that I am hearing on the street during the 200+ miles that I have walked door-to-door talking to voters....

Some students are thinking that College might be too expensive, and not worth going, and they are thinking they will just try to enter the workforce. But unemployment is so high, and many people are competing for the same jobs.

I believe that this is the wrong mindset for our future leaders of the free world.  America became great, because our citizens were hard working educated people.  To compete in a global world, we need to continue educating our citizens.  Currently only 3 out of 10 have a college degree, and only 6 out of 100 have a Master’s degree, and 1 of 100 have a PHD.

Then some citizens believe that we should forgive their loans, since they can not find a job, and can not pay their monthly payments. I would love if my loans and my wife’s loans could be forgiven, but who would pay? Ultimately someone has to pay for this debt, and this would just be a bandaid to a long term issue.

Some parent’s income are too high to qualify for student loans, and the family must get a private loan. I believe that the parent’s income should not affect the student. We need to make sure everyone has the opportunity to receive higher education.

Some are fortunate enough to have saved and invested wisely to provide for their children’s education and do not need a loan.  The parents could just payoff their child’s education, but I believe that a better decision would be to invest in a business for the child after graduation, or invest it towards a first home, or give them an investment account. 

The Current Loan System

Here is an example of a current $40,000 student loan with an interest rate of 12%, and a term of 10 years. The payment would be $573 a month.

My Proposal

I believe that since an education is a long-term asset, we should have a long term debt associated with it.  Also the US Government borrows money by selling US Treasuries, so why not link the interest rate on student loans to the US Treasury, and cut out the middle men. Under my proposal, the example would be $40,000 student loan, with an interest rate linked to US Treasury of 2%, and a term of 50 years. The payment would be $105 a month.

I believe that we could “Refinance” all current loans into this new system, and the savings would be on average $470 per student in the household per month. I believe this extra money would be spent in the local economy, and this could help stimulate local businesses. Please visit my website to watch a video on this issue and many others, www.JimHickeyForAmerica.com

Tell me what you think?