The “incredible, awful, crushing weight” of student loans

The policy options available to him are rife with justice, economic injustice and sustainability concerns. Long-term structural change would require a major overhaul of our current system, not just temporary relief for the credit-stricken. And while political analysts generally agree on the need for reform, determining which path to take is a contentious issue.

People in other developed countries, or even older generations of Americans, have rarely had to deal with the burden of large student loan debt. In other affluent countries, higher education is treated as a public good – similar to how K-12 education is already treated in the United States.

The United States prides itself on being a destination for education seekers from all over the world. But are the associated tuition fees something to be proud of? Below we present three systems that approach tuition and student loan funding differently, as highlighted by our colleagues at The Upshot.

Australia: Australia has much lower tuition fees than the United States, which can be as high as $8,300 per year depending on the degree. This results in an average borrowing around $23,500.

Australian borrowers will not start making payments until their income exceeds the equivalent of about $33,000. Payments are automatically collected through the tax system and are also automatically offset against income – similar to tax withholding in the United States. Students can also prepay tuition, but 85 to 90 percent take out an income-tested loan instead.

Automatic collection of income-related payments is a critical part of a well-functioning credit system, said Rohit Chopra, senior fellow at the Consumer Federation of America. “Giving borrowers the choice to repay through their employer avoids much of the bureaucracy and distorted incentives of middlemen.”

Sweden: Swedish universities do not charge tuition fees, universities do funded by grants by the government. However, many students take out loans to support themselves while studying, and the average student debt in Sweden was the equivalent of around US$21,000 in 2018. This is comparable to average debt in the United States, but students in Sweden are a far less likely default on their loans thanks to lower interest rates and a much longer repayment term.

About Natalee Broderick

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