Seven Ways to Combat the Student Debt Crisis

3. Borrow rationally.  Some financial gurus recommend against student loan debt entirely.  I would agree if there were structures in place to guarantee affordable higher education for all, but there are not.  So, here’s my recommendation for sensible borrowing: your total student loan debt should not exceed 50% of the income you can reasonably expect your first year out of college.

Have an idea of what is likely to happen when you graduate, where you want to be, and what it is likely to take to get there.  Make sure your expectations are reasonable. Don’t google “average salary computer programmer”–talk to the career counselors on campus, talk to people in the field.  Research entry-level jobs in your field, get a realistic (maybe even slightly pessimistic) estimate of a first-year salary in that job, and scrupulously limit your borrowing to 50% of that number.

That puts you on track to pay off the student loans in two to five years.  (Five if you’re hard-working or lucky, two if you’re both.)  You can do that.  Two years of ramen noodles is survivable.  Two years of working two jobs is doable.  Rice-and-beans living isn’t torture.  (Take it from someone who had not a few years of rice-or-beans living.)

Four strategies for everybody else:

4. Parents: Do not co-sign loans you know your children can’t pay back.  Use the 50% rule above, and say no to any college plan that violates it.  You are not harming your children by forcing them to go to their second-, third-, or tenth-choice schools.  Seriously, my parents did this to me when my sophomore-year scholarship package was drastically reduced from my freshman-year package.  I lived.  I didn’t even hate them for it.  And I went on to get a great education elsewhere.  Your child can too.

You are not harming your children by refusing to allow them to harm themselves, and $100K in student loans with a BA in French literature is not okay.  A BA in French literature is wonderful, and should not be reserved for the wealthy, but if you cannot cash flow it, your child cannot have it.  Society is cruel to deny your child an education, but you are not cruel to deny him a lifetime of student loan payments.

5. Employers: If the position you’re hiring for requires higher education, make sure its compensation package includes a student loan repayment benefit.  Match employee student loan repayment, up to 5% of salary.  If you offer this in place of retirement benefits for up to five years, it’s cost-neutral and doesn’t incentivize borrowing.

Programs to fund employee education already exist.  Expand those, especially if you require employees to have extensive graduate school.

Some of the classic professions already have the seeds of what could be revolutionary programs in funding graduate education–denominations could expand (and reform!) student pastoring models; law practices could expand (and create!) paralegal-to-lawyer paradigms; universities already have the TA/adjunct model–it would work so much better if people weren’t permanently dead-ended there.  Hospitals in underserved areas are figuring out that offering to pay for med school in exchange for years of service works–that could revolutionize the health care industry if it were developed and deployed sensibly.