We can’t fix student loans without addressing college costs

The student loan situation is a mess. We are transforming what should be a liberating process into a system that closes doors instead of opening them. At its worst, the loan system puts debtors into a dreary landscape somewhere between indentured servitude and sharecropping.

At the Morehouse College commencement exercise, the speaker, billionaire Robert F. Smith, surprised the graduating class by telling them he would pay off their student loan debt. When the class of about 400 realized what he had said, they reacted ecstatically. It was as if they had received a new birth of freedom. That is exactly what they got.

Smith is a graduate of Morehouse and his gift is straightforward enough. It is now being parsed, though, and there is a risk that his generosity and its simplicity will be left behind by imprecise notions of what it should have been. We can only hope that common sense prevails, and this wonderful gift is not smothered by hypothetical “what about” and “what if” considerations. We can only hope that someone in authority will stand up and say something like, “for heaven’s sake, it is what it is. Just do it.”

As individuals in this world there are things we can control and things we cannot. No individual, even Mr. Smith, for example, can fix the student loan mess …in part because it has a past that includes a lot of bad decisions by individuals as well as government and academia. Unless science achieves a breakthrough in time travel, neither government nor generous individuals can provide a do-over, which would reverse the bad decisions and twists of fate that have brought pain.

Handwringing in the news media greets any new idea presented to address the debt that trails those who borrow to finance it. In today’s world there are few, if any, “fits all” solutions in higher education. Someone or something is always hurt or left behind. Beefing up science, technology, engineering and mathematics (STEM) subjects, for example, often means a weight-loss diet for liberal arts subjects.

Those who are or feel that they have been left out of Smith’s marvelous gift might console themselves by examining the array of student loan solutions being proposed or favored by the presidential candidates. It is an extensive menu of ideas cooked up in different cuisines — some imaginative, some grounded in reality and others more reflective of wishful thinking.

The proposals are certainly diverse. One analyst drew up a matrix in order to depict the student debt solutions and which candidates supported each program. The real benefit of this matrix, though, was not to identify what your favored candidate proposed. That is easily enough to determine by visiting their websites.

The very dimensions of the matrix, though, tell us just how complex the student debt problem has become. There are 20 rows, of course, because there were just 20 announced candidates for president at the time the matrix was drafted. And there are six columns, each defining a category of solution to the student loan problem.

The six categories are: student loan debt cancellation, federal refinancing, tuition-free college, baby bonds, federal cost-sharing and expansion of forgiveness programs. Within the six categories, of course there are a significant number of variations, as each candidate puts a different spin on a particular aspect of the problem.

The only thing that the proposals have in common is that they will all cost money. Only a few of the candidates have addressed this issue directly. Elizabeth Warren, for example, wants to shift the financing burden to the most successful, wealthiest individuals by way of the tax code. And while not one of the 20 in the matrix, Gov. Jay Inslee’s plans for higher education tuition all have new taxes attached.

The Student Loan Program has been a federal government monopoly since 2010 and its potential losses from default are still substantial — although lower than they were before our economic recovery. It is just part of the overall student loan mess that remains a low priority in Congress.

Most of the Student Loan Program is an example of what happens when you don’t think things through. No one apparently wondered what would happen if busloads of students, pockets bulging with borrowed cash, showed up on higher education’s doorstep. And when college tuitions and other costs went skyward, apparently no one saw any connection to the easy money loans.

Smith saw something that he could control, and his generous gift should be appreciated for what it is: a reflection of our society at its best.

No amount of generosity or taxation, though, can fix the Student Loan Program mess unless we address higher education’s costs — unless we think it through.