Examining Options Other than Debt Forgiveness for Student Loans

When it comes to “solving” the student loan debt crisis, there has been an overwhelming focus on strengthening existing repayment schemes and enacting wide-scale student loan forgiveness without a persuasive argument about how to address the fundamental issues.

Due to efforts taken by both the Trump and Biden administrations in response to the outbreak, federal student loan payments have been halted for nearly two years. Pressure from some progressives and a shift in the public narrative has made borrowers more accustomed to the idea of massive loan forgiveness.


As of May 2, 41 million borrowers will theoretically begin making payments on their student loans, while inflation is at its highest level in 40 years. This creates an interesting dynamic.


The question is, were the student loan suspensions just a ploy to get taxpayers to foot the bill for massive loan forgiveness? If this is the case, it may be functioning. White House hints at another prolongation of the pay pause, allowing the president to make a decision on whether to utilize executive authority to erase student debt.

Instead of relying on loan forgiveness as a quick fix for the student debt crisis, authorities should overhaul the way students pay for their post-secondary education on a structural level.

Starting with creative financing alternatives that address the misaligned incentives that colleges get billions of dollars in government subsidies each year with no reason to manage costs, the student borrowing trend will continue to worsen.


Otherwise, student loan forgiveness unfairly saddles all Americans with the student debt of a minority who choose to borrow for their education. Creditors should not have the option of extending forgiveness to students who have already paid off their debts and put in the time and effort to pay them off.

Loan forgiveness is regressive, benefiting higher-income borrowers with higher levels of education at the expense of lower-income borrowers. It’s not just current borrowers who are split on the matter.


Use this crisis to establish a juster, more egalitarian, and better-supported student loan system, says Vice President Joe Biden.


In order to reverse the trend of student borrowing, matching education savings programs and income-share agreements (ISAs) can be used to remove financial barriers to post-secondary education, as well as to resolve mismatched incentives.

As a result of these models, the government is no longer involved in the lending process for higher education.

To participate in a postsecondary education market where providers must compete for students’ funds based on the perceived value and relevance of programs, they provide students with the financial resources and self-agency to pursue (and support) personalized pathways.


Students in every state should have access to matched school savings accounts. A number of states have enacted legislation encouraging citizens to set aside money for postsecondary education, continuing education, or specialized training.

As a matched savings program, Earn to Learn encourages individuals to save money. As part of the Earn to Learn program, students who save $500 will get an 8:1 public-private financial match.

To reduce and in some cases erase student loan debt in Arizona, Governor Doug Ducey has given his support to Earn to Learn. It was a bipartisan and bicameral bill introduced by Congress last year that would launch a federally matched savings program.


Individuals, corporations, philanthropy, educational institutions, and the government can all make tax-free investments in matched savings accounts to encourage students to follow academic paths that are most closely aligned with their personal preferences and career aspirations.


Achieve outcome-based financing such as income share agreements by making it possible. Income Share Agreements (ISAs) link a student’s educational costs to their post-program earnings.

Programs that have been proven to be valuable, relevant, and useful in the marketplace are encouraged by an ISA in order to maximize the return on investment for students, ISA providers, and education partners alike. This “skin-in-the-game” approach to education finance is unlike any other method available.

All educational providers, students who are hesitant to borrow from government (or private) programs, and legislators who want to align cost and value in postsecondary education might benefit from it.

Students who engage in the San Diego Workforce Partnership’s Workforce Income Share Agreement Fund have already reaped benefits without taking on federal student loan debt, for example.


Models like ISAs offer both advantages and disadvantages. In an effort to regulate Individual Student Loans (ISAs) as student loans, several states and the federal Consumer Financial Protection Bureau are attempting to do so, however, over regulation of ISAs could restrict students’ access to higher education and novel financing alternatives.

Our goal is to discover best practices for outcomes-based underwriting, consumer protection, and alignment of incentives in order to develop acceptable regulatory methods for ISA programs. This includes engaging with proponents and detractors of the ISAs.


Instead of feeding the flames of the divisive debate over “forgiving all loans” or “doing nothing,” politicians can offer fresh options that call into question the current system and address the problems afflicting millions of students nationwide.

In order to change the postsecondary education system, we want a group of ethical leaders who see this crisis as an opportunity to implement long-term financial solutions that benefit all students.

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