Slate Magazine has an interesting take on the student debt crisis, blaming the Universities for their lack of responsibility in helping to ensure students end up economically viable.
If you borrowed money from the federal government to finance your education and you’re having an extremely hard time paying it back, I have good news for you. President Obama has just signed an executive order that expands eligibility for Pay As You Earn, a newish program that caps the monthly debt payments of eligible borrowers to no more than 10 percent of their monthly income. And if you still have outstanding debt after 20 years, or 10 years if you work in the public sector or for a nonprofit, it will be forgiven, like a youthful transgression.
You crazy kid! Remember when you thought taking on this student loan debt made sense because getting a college education meant that you’d eventually earn enough to pay it off? Oh gosh. Those were the days. Clearly you had been passed the peace pipe once too often.
Cutting debt payments for cash-strapped borrowers is a nice gesture. In 2008 and 2012, Barack Obama fared well with under-30 voters, and Pay As You Earn will give some of them a nice little boost, just in time for the midterm congressional elections. But there is a much larger problem that the president’s feel-good proposal fails to address, which is the fact that people who take on federal student loan debt aren’t earning enough to pay it back. America’s higher education institutions aren’t offering value for money. And that’s a problem that tinkering with the federal student loan program won’t solve.