Student Debt needs to be dischargeable in bankruptcy. Make lenders actually have to start determining credit worthiness before just giving loans to everybody at high interest rates. This will also make s lot of students have to look at more realistic and probably better situations for themselves. Trade schools, 2 years of Community College, etc… This will also force universities to be more competitive for students and instructors.
Put the same requirements onto student loans as you require for any FDIC Approved Lenders for commercial credit. Simple Interest, no Capitalization or no Capitalization that takes you above the original loan request plus 10% one time. Payment options should START at interest repayment. If your monthly interest accrual is $70, then that’s your minimum repayment option. Deferred payments till graduation? That’s no longer the default, that’s a feature that you need to apply for and approval should be on strict standards. The payment portals should be required to show the Fed Box and readily accessible amortization figures.
Pell Grants need to be accessible ONLY for 2 year community colleges and trade schools to start unless the student can show scholarships that will cover the rest of tuition and housing. Students in the income bracket to receive Pell Grants generally aren’t going to have the financial resources necessary to support them at a 4 year institution and will be far more likely to get truly behind and victimized in the Student Loan racket. Once 2 years of Community College and/or Trade School is successfully completed, the Pell Grants can be used towards a 4 year degree.
Student Loans are a one time approval and NOT an open line of credit. Funds can only be used for tuition, campus approved housing, and fees assessed prior to the academic year.
Schools accepting student loans should be required to provide fiscal counselors in addition to an academic counselor. Work with the students on their projected academic path, costs associated, and projected salaries… Public High Schools should add an actual financial preparation class that is a requirement for students in the college prep or stem tracks in HS.
For those existing in substantial student debt now, put a cap on total payback at a no capitalization, 10% APR on the original loan request. If they’ve already paid it off, the balance is forgiven. This can only be on Federal Direct or Subsidized Loans.
