The New America Foundation, a nonprofit think tank, has published a new report proposing a complete revamping of student financial aid and student loan repayment. Given the extent of the student loan crisis in America (student debt has outpaced credit card debt two years ago, over two-thirds of borrowers are having trouble making their payments, and economists have likened the growing student loan debt crisis to the subprime mortgage crisis that triggered the Great Recession), something clearly must be done.
Some of the proposals include:
- Increasing Pell Grant funding to minimize student loan debt burdens for low-income students.
- Simplifying federal student loan repayment by having a single income-sensitive repayment plan similar toIncome Based Repayment (IBR) or Pay As You Earn (PAYE).
- Completely eliminate higher-interest and higher-burden federal student loans such as Grad PLUS loans and Parent PLUS loans (which have led to an exploding parent loan debt crisis).
- Eliminate education and financial aid-related tax credits and instead provide additional direct financial aid to students.
- Tie the availability of financial aid to a school’s performance in providing an education and career path for its students, thereby increasing accountability and return on investment.
- Restore bankruptcy rights to private student loans.
Not to toot my own horn here, but these proposals mirror some of my own proposed student loan reforms that I posted about last year. Clearly, something needs to be done, and we need MAJOR reform. Do you agree with the proposals put forth in this new report? Read the report and decide for yourself.