TEXT OF COMMENTARY
Steve Chiotakis: It’s May and for the college crowd, it’s graduation time. Cause for celebration, and time for harsh reality. That is, the mountain of debt that’s accumulated for those who are finishing up. While repayment can be a big burden, commentator Robert Reich says he has an idea that might make it a little easier.
Robert Reich: The average young person now graduating from college has to repay almost $22,000 of student loans. That’s a record, partly because college costs have continued to rise even during the downturn, and because other sources of college funding have taken big hits — like home equity loans and 529 plans that allowed families to sock money away for college.
But how can a young people repay this much money when the job market is so bad? The law doesn’t allow college loans to be discharged in personal bankruptcy.
Even when they do find jobs, college grads have no choice but to take the job that pays the most. They can’t afford to do what they might really want to do — become, say, a social worker or writer or legal services attorney.
Now this problem won’t go away when the economy recovers. College debt burdens have been rising for years, and the career choices of many newly-minted graduates are narrowing to those that help repay college loans. We need a new system. So here’s my proposal: Any college student can get full funding from the government, with only one string attached. Once they’ve graduated and are in the work force, they pay 10 percent of their incomes for the first 10 years of full-time work into the same government fund they drew on to finance their college education.
Now maybe that formula will need to be adjusted up or down to cover all the costs. And surely some people will game the system as they do every other one. But the essential idea is that linking the costs of college to subsequent wages makes college affordable to everyone.
And linking repayment to a fixed percent of subsequent wages for a limited number of years enables all graduates to follow their dreams into whatever work they want, without worrying about earning enough to repay a loan. Those who end up in relatively high-paying jobs subsidize those who end up in relatively low-paying ones.
It’s fair, it’s simple, and good for society as well as the individual. So happy graduation!
Chiotakis: Robert Reich teaches public policy at the University of California, Berkeley.
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