Like all of you, we never took on debt when borrowing money without first projecting the financial burden those obligations presented, and we certainly did not borrow beyond our ability to pay back the loan(s).

Before starting my career in the mechanical trades, I attended college for two years, mainly because my parents and, quite frankly, society expected it. In the early 1970s, society looked down its collective noses at mechanical trades as menial labor unworthy of an elevated status. Students who attended votech schools while completing high school fared no better with respect to respect for their chosen field of study. When I quit college, due mostly to being a square peg trying to fit in a round hole, I had a 4.0 in my major of psychology. I just could not see myself as a shrink: “Zo, tell me vat ails you?” I literally stumbled into PHVAC work by happenstance. I didn’t follow my passion, it found me! Looking back, I would do it all over again.

But what about entire generations of confused adolescents graduating from 12th grade who haven’t yet found their way? You can only succeed with a college degree has been pounded into their brains and far too many have been led to believe that the more prestigious the higher-learning institution, the more lucrative will be their career. The days of getting fabulous jobs paying top dollar with just a bachelor’s degree are long gone, and today, they often need a master’s degree to even be considered by employers. No worries if they can’t afford the annual tuition, the federal government and/or private banks will gladly loan you the hundreds of thousands of dollars!

What’s missing?

• Has anyone provided realistic grounded-in-reality projections for potential earning capacity for the various degrees? I know, from experience, that 18-year-old freshmen/women are, in the eyes of the college, adults and we parents are not entitled to know diddlysquat about their grades or conduct. Colleges should not be permitted to push students into borrowing money before counseling them on the realistic realities of job placement and earning low/high potential for that field of study.
• Sound advice about loan repayment schedules, including interest and principal breakdown. Missing payments causes interest to compile and no amount being repaid to service the debt goes towards principal until the accrued/compounded interest is paid in full. The following is excerpted from https://www.finra.org/investors/personal-finance/how-your-credit-score-impacts-your-financial-future.
• Their credit rating has a direct impact upon the level of interest they will be charged. This applies to us all. Suppose you want to borrow $200,000 in the form of a fixed rate 30-year mortgage. If your credit score is in the highest category, 760-850, a lender might charge you 3.307% interest for the loan. This means a monthly payment of $877. If, however, your credit score is in a lower range, 620-639 for example, lenders might charge you 4.869% which would result in a $1,061 monthly payment. Although quite respectable, the lower credit score would cost you $184 a month more for your mortgage. Over the life of the loan, you would be paying $66,343 more than if you had the best credit score. Think about what you could do with that extra $184 per month.

There should be a mandatory requirement to work with students about to obligate themselves to student loan debt to work up a realistic post-graduation real-world budget that encompasses all anticipated living expenses, incorporates a cushion for vacations, dinners out and investing for their retirement.  

Why not treat federal student loans like a business loan? Charge prime + 1/2-point for the interest. That would be fairer than the near-credit-card interest rates many are saddled with, and presently, payments begin six months after graduation.

Meanwhile, students attending trade schools who borrow the tuition find their skills in high demand with good-paying jobs wide open upon graduation and have no problems repaying their student debt.

For the past two years, student loan repayments were suspended due to COVID-19, and for 2022, the federal student loan interest rate has been 0%. Now we are informed the students with remaining debt will be provided loan forgiveness of $10,000 to $20,000. Say what? That transference of debt to all taxpayers is inherently unfair. Imagine you borrowed from the federal student loan program, but you honored your obligations while forgoing dinners out and/or the vacations you would have loved to take only, to now, be slapped in the face like Chris Rock was at the Oscars! Or to not be eligible for the same giveaway if you’re just now applying for a federal student loan. It’s a slap in the face for all of us who work hard, provide for our families, have jobs for employees and honor our debts without so much as believing we should be entitled to a free handout.

Our government is sending the wrong message to the students eligible for this handout. One can’t help but wonder how these same students will handle their financial obligations once they have to deal with real-world realities. No worries, they can simply borrow without limits and declare bankruptcy.

Harvard has 45 billion dollars in its endowment fund! Endowment funds for universities are not taxed. Well, isn’t that special. Easy money for student loans has enabled colleges to raise tuition dramatically over the last few decades, rendering a college education unattainable without student loans for many who believe college is the only way to a great career. Meanwhile, students attending trade schools who borrow the tuition find their skills in high demand with good-paying jobs wide open upon graduation and have no problems repaying their student debt.  

Mike Rowe states there is $1.7-trillion dollars in outstanding student loans today! Rowe also cites 11.5-million jobs that no one seems to want. The federal government doesn’t seem to know how much this debt transfer will cost all of us, but projections run from $400 billion to $1 trillion. The worst part about this student debt transfer is it does nothing to address the bloated college tuition or the exorbitant interest rates being charged. Why not also give every student a credit card too; in spite of the fact they don’t have a job? Sounds crazy, right? Yet that is exactly what happened when our oldest son attended Slippery Rock College.  

How does the student debt transfer differ from PPP (Paycheck Protection Program) loan forgiveness program? For starters, small businesses were hit hard by COVID-19 lockdowns with 55 million jobs in jeopardy of being lost. Eighty percent of your PPP loan was required to fund payrolls and the government required verifiable reporting to keep PPP borrowers on the straight and narrow or the loan would not be forgivable. Imagine the devastating consequences if all those small businesses were forced to go out of business and those 55 million jobs were lost. Student loans are exactly that: An agreement to borrow and repay funds following graduation and landing a job. Apples to oranges.