Tying It All Together, Turning the System on Itself

Let me reiterate a couple things before moving forward. Currently, we have 44 million Americans who owe $1.4 trillion dollars’ worth of debt, which is set to double in the next 10 years to $2.8 trillion by 2027 ($2,800,000,000,000) The old FFEL loans that are still held with banks 10 years after they have stopped lending them have grown from $300 billion to $600 billion dollars of debt. These FFEL loans that were lent were designed, just like repayment plans are now, that the default repayment plan is a 10-year plan. Yet here we are, 10 years after they started to dry up lending principle in this way, and the debt has doubled. We have a system of lending and borrowing that does not hold the educators, the product makers, accountable for their product to work. 73% of all college graduates do not go into the field they studied for. Millions of people, because of this, regret going to college. They have nothing to show for their education but debt.

THIS SYSTEM ISN’T WORKING!!

Maybe I should say that a little bit gentler: our current system isn’t working nearly as efficiently as it possibly could.

All that said, if you don’t see how my solution is much better than what’s out there, then I can’t help you. You can stop reading now.

Here is the thing. With IDR coupled with forgiveness, what we are essentially doing is betting on the education system itself. We are turning it inward. If you went to school and took out a debt for a higher education, then your intention was to make yourself—the asset—more valuable to our society. Now if you took on this debt to buy the education, and the education didn’t work for you, it didn’t make you more valuable. So you shouldn’t have to pay the debt, because the education didn’t do its job.

That may sound super liberal or hippie, but I don’t care. If you were lent money to purchase a terrible product, and that product didn’t work, then why are you paying for it?

Or if the product or education did work for you but just not to the full potential you were told it would before you purchased it, should you have to pay for the whole thing or just what it is worth?

This is a question you can ask yourself, because you already know my answer, and now you know the tools to do it actually exist. Personally, I don’t think we should be making a dime on student loans. I honestly believe they should be interest free, and I think that we should do everything in our power to lower the cost of education, because what we are talking about is investing in our future. We are investing in the next generation and all the amazing things they can do with quality education applied to the problems of our country and our world. Who doesn’t want to invest in that? In our current situation, we are leveraging young Americans’ futures to make profit.

With the IDR and Forgiveness solution, the government (the lender) essentially has a portion your working years to recoup their investment based on your income. Based on whether the product they sold you worked. If they can’t get back what they invested, they eat the difference, and they eat their ungodly growing interest. If the product worked, then they get their money back with interest. This way, income becomes the great equalizer; your income reflects the value of the education, not the price the educational institution sets.

That not only seems fair but also the smartest solution. Because like I said, we would be betting on the education to work. We all want it to work! We all want to make a good income. If the lender and borrower agree that the education should work in order for the lender to get paid back, that arrangement will compel quality control for the underlying education being sold. It will put all colleges under a microscope and put all the institutions in the business of selling higher education on notice. Their product better be cutting edge and top notch; and it better prepare the borrower to make money in the marketplace immediately. Otherwise, the loans won’t get paid back, and we can track those loans back to the institution. Then no money will be lent on this education; students won’t buy; and that institution (or at the very least, that program) will be shut down for lack of funds. I think even the strongest of capitalists would agree that we should give that a try, because what we are doing now isn’t working.