Robert Reich, secretary of labor in the Clinton administration, recently joined me online to take questions on an idea he thinks would help the many people who are coming out of graduate and professionals schools with burdensome student loan debts.
Graduate students borrow on average an additional $31,700 beyond their undergraduate borrowing, according to a 2003 report by Nellie Mae, a student loan lender. For many, paying off that debt can take decades.
Reich, now a professor at Brandeis University, believes we should restructure the federal student loan program into one in which people attending graduate school pay back a certain percentage of their income over a 10- or 15-year period. The repaid loans would go into a general student loan fund, then be lent to other graduate students. Private lenders could provide the loans, and the portion not repaid by the graduate students would be subsidized by the government.
To say the least, readers had a lot of questions about Reich’s idea. I think his proposal is worth more debate. So here are some questions he didn’t have time to answer during our online chat:
Question: Under this proposal, what incentive would an individual seeking a graduate degree in a typically low-paying field have to pay for any of their education upfront? Why would they bother to work nights and weekends or save up prior to enrolling to foot part of their bill when they end up having to pay the same 3 percent of their salary regardless of the loan balance?
Answer: It’s still cheaper to earn the money upfront than to pay it back as 3 percent of full-time wages, unless someone were to choose a very low-paying job.
Question: What’s wrong with the system that would necessitate such a change?
Answer: The debt load carried by graduates is so large that most can’t possibly enter low-paying professions such as social work, teaching, or legal services, even though they might want to. That’s bad for them, and it’s bad for the country.
Question: Would you consider household income or just the borrower’s income? What if the graduate decides not to work, but his or her spouse makes $100,000?
Answer: For graduate loans, it would be easier to consider only the borrower’s income. Yes, it’s possible that the borrower may decide never to work, but it’s unlikely. Presumably, they went to graduate school to further their career. If this program is extended to undergrads, it may be fairer to consider spousal income as well if it turns out that a significant number of college grads decide never to work. That seems unlikely, but we need more data on this.
Question: Do you envision an automatic repayment through payroll withholding and IRS-verified income? If so, how would you collect from the self-employed and unemployed?
Answer: You could have an opt-in for withholding, but that’s not necessary. Today’s student loans don’t involve payroll withholding, after all.
Question: Is debt really the issue? I work at a nonprofit offering fellowships to law grads doing social justice works. But statistically, 69 percent of public interest lawyers leave the field within five years. Do you think there may be a bigger issue of the difficulty of teaching, social work and public defense? Or perhaps more people are entering law school to chase the money.
Answer: Undoubtedly, this kind of work is difficult, and many people who start drop out eventually. That’s understandable. The program I’m proposing doesn’t require that grads spend their lives in the lower-wage jobs they initially choose. In fact, it doesn’t require that they do anything except pay back a fixed percent (I’m using 3 percent as an example) of their full-time wages for the first 10 years of employment.
Question: I guess my basic question is whether there is a bigger cultural disassociation with the plight of the poor that isn’t addressed by your plan. If so, how do we fix that? I’m an African-American public interest lawyer, and most of my (also black) friends say the best thing they can do for poor people is to not be poor themselves.
Answer: My proposal isn’t intended to deal with all the problems of poverty and the understandable desire of many to avoid dealing with the poor. All it’s intended to do is make it financially possible for young people who want to go into low-wage professions to do so.
Question: How does this address the real problem, which is the skyrocketing cost of college tuition? Tuition costs will continue to rise, and the full amount will never be paid back even if others are subsidizing other people’s education. Shouldn’t we address issues such as salary caps for college presidents and administrators? Their incomes are rapidly approaching that of most CEOs.
Answer: College tuitions are rising faster than inflation, and that’s a huge problem that needs fixing. But unless or until we fix it (and don’t hold your breath), this proposal would help.
Washington Post Writers Group
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
