Looking for a solution to America’s student loan crisis? Trump may check down under.
Student loan debt in America reminds me of that dormant volcano on an island. We all know it’s there. We all know what is festering underneath. We know it’s going to blow, but when? Neither Republicans nor Democrats have put together a feasible solution.
However, President Trump has made several attempts to get the ball rolling on evacuating the volcano village that is higher education costs. (Has this metaphor been spent?) I wrote here and here on it.
Critics say his plan to help pay off loans and get money back to DC is unfair because it asks everyone to pay more up front and grad students to shoulder more of the burden. His plan actually means undergraduates would pay less in the long run, but no one wants to report that.
So would his plan help to ease the burden on students and the government at the same time?
If only there was some sort of study or a country also at a crossroads with a student loan crisis. Oh wait, there is: Australia. Democrats love pointing to other nations to show a great rubric for gun control or universal health care. So allow me to turn the tables and present you with Australia.
It is the land down under with a plan similar to Trump’s loan solution. Guess what? It is working.
Plan down under
I grabbed this study from Brookings. They seem to be the think tank least concerned with politics and most concerned with a solution.
Here’s your brief history of the Australian student loan crisis. Around 2009, in an effort to have more college graduates, the country opened up its loan program to all. They offered a generous repayment plan with a high-income threshold for payback. Basically, until you make a certain amount, you do not pay anything back. It was incredibly helpful to students.
However, in recent years it has become apparent that the program cannot sustain itself. Lawmakers sprung into action and released a plan to save the program.
Students now have a lower threshold for when they have to begin paying back. (It was $55,000 per year, it will be $45,000 per year.)
I understand that it sounds cruel. But, the loan repayment rises as the student, now worker, sees higher income. Also, there is no loan forgiveness.
It’s sort of a bitter medicine. Nobody wants to have their easy repayment and forgiveness taken away. However, this current system is untenable.
For years liberal publications have pointed to Australia as the model for U.S. loan repayment. “The right way to do student loans,” they exclaimed.
But what Australia learned is that their model was unsustainable. So the system that was so widely praised is the same as ours: broken.
Our lesson to learn
Down under, politicians bit the bullet and pushed forward with a new repayment plan to keep the system intact. We need to do this.
The United States doesn’t need to follow the plan exactly. There are many different factors in each country’s crisis. But, the same message: No plan at all will just make the problem worse.
Trump’s plan has been widely criticized but is less burdensome than the new Australian model. A brief refresher, his plan is to have graduates pay more up front and less in the long run; 12.5 percent instead of 10 percent. It also offers loan forgiveness.
Most critics of the plan point out that it raised the costs on young undergraduates too soon. Or that the program doesn’t help graduate students. But these are the same people that pointed at Australia and said, ‘Do it that way.’
It is insane to think that the government can just forgive $1 trillion worth of student debt and not have massive economic ramifications. It is ludicrous to expect college costs to go down when the government is backing the tuition dollars. And it is ridiculous to expect someone else to pay for loans you took out. (I wish higher education were free, but it’s not. It is your choice to pick a school you can or cannot afford.)
In a strange turn of events, this conservative is pointing at the Australian loan program and saying, ‘Look at what they’re doing.” The system failed because it was too generous, so they fixed it.
Trump has a plan with similar tenets of Australia’s plan. Now it’s up to the people who held Australia’s program in high regard to either put aside their views on Trump for a solution or face the upcoming loan eruption.
Article last modified on July 30, 2018. Published by Debt.com, LLC . Mobile users may also access the AMP Version: Trump’s Solution to the Student Loan Crisis May Come From Australia - AMP.
Article last modified on July 30, 2018. Published by Debt.com, LLC .