By Andrew Potocki
Student loan debt has reached astronomical proportions in recent years, with roughly 70 percent of college students borrowing. The total student loan debt has reached roughly $1.4 trillion, making it the second-highest consumer debt category, behind mortgage debt at roughly $12.8 trillion.
There have been a plethora of solutions given to address the matter, one of the more well-known ones proposed by Sen. Bernie Sanders being to make college tuition-free and forgive existing student loans. The problem is, this isn’t magic — and it isn’t that simple.
Inspired by other countries with free tuition like Sweden, France, and Norway, plans for student loan forgiveness garnered a lot of support with, you guessed it, college students and alumni who struggle to pay back their existing loans.
But even in these free higher education countries like Sweden, student loans are not foreign concept. On average, student debt in Sweden is roughly 172,000 kronor, or about $20,000. These loans are meant to cover living expenses, since it is much less typical for parents to help pay for their children’s college in Sweden.
Compare that to the $30,000 average student debt of U.S. students who complete their undergrad years and it makes you wonder why we’re the only country with a delinquency rate over 40 percent, according to the Wall Street Journal.
Some believe it’s not how much they pay, but how they go about paying it. In fact, a lot of countries besides the United States have moved towards longer repayment periods and low initial payments. In England, the repayment period is over 30 years, and in Germany it is 20 years.
Australia uses a payment system much like our Social Security payment system. Borrowers pay nothing until their earnings reach roughly $40,000 where they pay 4 percent of their income until the debt is paid off.
Payments rise and fall automatically with earnings and this allows high income earners to finish in as low as just five years, while low income earners can take their time in repayment.
The truth is, though, in the United States, the cost of living has skyrocketed — housing prices have increased 500 percent in some cases — and wages have been stagnant since 1980, so these loans can never be repaid.
This is a major problem with no light at the end of the tunnel.