My dad grew up in a country that was generous and farsighted enough to see that the more its people learned, the more its people earned. So after deploying to fly a B-24 Liberator over Japan, he went to college on the GI Bill and learned enough to open his own law practice. And he earned enough to start a family, raising my siblings and me to understand that if we worked hard and gave back, there was a strong and bright future ahead.
Today, our kids aren’t getting the same bargain. The vast majority of students — 70 percent — are graduating with debt. On average, they’re carrying loan amounts big enough to buy a nice car or cover the down payment on a house. But instead of making those investments, or starting a family or a business, they’re struggling to keep up with student loan payments.
The result: Total student loan debt in our country is $1.3 trillion and growing. First-time buyers are purchasing a smaller share of houses, and people younger than 30 are starting a smaller share of businesses than at any time since the late 1980s. And the problem will only get worse. Although average tuition at a public four-year college has more than tripled over the past 30 years, a typical family’s income has barely budged.
One might ask how this nation fell from first in the world to 12th in producing college graduates.
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We did it one onerous student loan at a time.
In Maryland, we saw these trends and refused to give up. We froze tuition at public four-year institutions while making investments in universities, community colleges and financial aid. We took steps to make sure our high school students were graduating with a degree that’s worth something and with some college credit or technical training already under their belts.
But like any state, we couldn’t solve the problem on our own. To really make a dent in student debt, the federal government will have to act.
Fortunately, the solutions are simple and straightforward.
First, Congress must allow students to refinance the debt they have. Unlike homeowners or businesses, student borrowers can’t refinance their loans to take advantage of lower interest rates.
This is outrageous. If we were able to bail out big banks, we can figure out a way to refinance college loans.
It’s also a big problem. Although Congress lowered student loan interest rates in 2013, it extended the fix only to new borrowers. That left millions of existing borrowers piling up debt at interest rates at or above 7 percent. Because Congress set the high rates, Congress has the power to fix them.
Second, we should cap the monthly payments on students’ loans, so students whose passion is teaching or policing or national service can pursue their dreams without worrying about debt or default.
The good news is that we have programs in place to do this. Numerous income-based repayment programs are available, and last year the Obama administration expanded students’ access to them.
But enrollment in the programs is low. A better policy would be to make income-based repayment automatic, then let students opt out if they want to.
All low- and middle-income students enrolled in the programs should have their minimum monthly loan payments capped at 10 percent of their take-home pay. In many cases, this would save students hundreds of dollars every month. And all borrowers who take advantage of these programs would eventually have the balance on their loans forgiven.
Alone, these two proposals — letting students refinance their loans and capping their payments — would go a long way toward relieving the burden of student debt. They are common-sense policies that would make millions of students better off.
To be sure, to end the student debt crisis for good we have to make college affordable for everyone. We can’t afford to make loans easier to pay off only to have colleges keep raising tuition. And we must hold colleges that receive federal aid dollars accountable for directing this money toward students who need it most — by tying the receipt of aid to schools’ performance in that area or rewarding schools that excel at making college affordable.
Our ultimate goal must be for every student — most especially low-income and middle-class students — to be able to go to college debt-free. But making sure our students get a far better deal on their loans is a crucial first step.
Martin O’Malley was governor of Maryland from 2007 to 2015.
© 2015, Special to The Washington Post