Cutting Student Loan Debt With Your Money
There has been much discussion in the news lately surrounding higher education. Whether it’s celebrities writing big checks so their children can attend prestigious universities, student mobs deciding who gets the right to free speech on campus, and of course the ridiculously high tuition costs and expanding student loan debt that has now reached $1.5 trillion.
Left leaning politicians for years have been pandering to millennials promising free college and blaming everyone but themselves for their high student loan payments. Most recently, presidential contender and Massachusetts Senator Elizabeth Warren introduced a policy initiative that would provide free college and eliminate at least some student debt for 95% of borrowers. What may be thought as a well intentioned policy, paying off student loan debt with someone else’s check doesn’t solve the root problem of college affordability.
Illinois State Treasurer Michael Frerichs also wants to help those struggling with student loan debt. And unfortunately, he wants to do it with state taxpayer money.
Illinoisans already know the dire financial situation the state is in, the backlog of bills, the underfunded pension liabilities, and the high costs taxpayers are already burdened with.
Frerich’s proposal would use your money to refinance student loans, which typically have the highest default rates, on average 11%, putting our already financially unstable state further at risk and forcing cuts to core government services. The bill passed the House with a vote of 67-33.
Rather than exacerbating the student loan problem, legislators should be holding state universities’ feet to the fire and looking for ways to reduce skyrocketing tuition costs that have doubled in the last decade and are forcing students to enroll at colleges in other states.
The current budget for higher education spends 50% on pension payments. That’s not a system that puts students first. It isn’t a system set up to put children on a path to greater economic prosperity so they can become productive citizens. It is a system designed to take money from you, and hand it to government employees. High tuition payments are funding millionaire pensioners, instead of saving students money to invest in their own small business or make a down payment on a home.
Student loan debt is a problem. But it’s not going to be solved with more government and risky financial investments that foots taxpayers with the bill.