By Marlin Stutzman
For Hoosiers and young people everywhere, leading a successful and fulfilling life depends on having the education to handle the world on their own. Unfortunately, students find themselves all too often bogged down by debt collected after attending college. While a college degree can provide countless benefits, a real world education has many components -- one of which is an understanding of personal finance.
More than 40 million Americans have student loan debt, with the total amount owed surpassing $1 trillion. Compare this to 2003 when student debt totaled around $240 billion. Two reasons behind this soaring burden is a significant increase in borrowing to pay for college and the cost of tuition increasing well ahead of inflation.
We want more Americans pursuing a higher education, however, student loans are more likely to be in delinquency on their payments than any other major type of debt (i.e. mortgage or credit card payments.) The lack of financial literacy is a major contributor to this rising problem. Students are not always versed on the financial burden they take up with school loans. Whether they overestimate the ability of their future income to pay off debt or fail to realize the total costs involved from paying interest or savings forgone, students need better options than writing a blank check to finance their future.
To improve this situation, I voted in favor of H.R. 4983, the Strengthening Transparency in Higher Education Act. This would improve consumer information to provide a clearer and complete picture of all student populations, streamline existing transparency efforts at the federal level to reduce confusion for students, and require better coordination by federal agencies to avoid duplication and confusion. This bill passed the House, now moves to the Senate where it still waits for consideration.
Thankfully, we do not have to wait for all the wheels to turn in Washington to help students. Right here at home, Purdue University has launched a pilot program to begin offering students an alternative to student loans known as Income Share Agreements (ISAs). With an ISA, students will spend time paying a percentage of their future incomes to investors who fund their education. Students agree to terms with investors, and since payments are based on income the students are never stuck with a debt burden they cannot afford to repay. Some private companies, including Verizon, Apple, and UPS, already offer partial tuition reimbursement to full- and part-time employees who pursue school while working.
Student loans are a complex issue because of the scope of the problem and the individual needs of each student. There is also no magic government solution for student debt troubles when our country is already $19 trillion in debt. I support any American taking the initiative to strengthen their craft or knowledge base and will continue to push policies that arm each student with the financial realities they will face after graduation.
Marlin Stutzman is the Third Congressional District Representative in Indiana.