Student Loan Crisis

In 2014, the average graduate with student loan debt left school owing $33,000. Under typical repayment terms, that amounts to a monthly payment of roughly $380, or about as much as it costs to lease a new luxury car.

Student loan debt is a big problem, and it continues to grow. But solutions may be simpler than they seem.

Students are completely out of the loop
Last year, Indiana University decided to send its students a message. It was a simple letter that detailed the amount the student planned to borrow in the upcoming year, and that student's total borrowings over his college career.

The letter also included an estimated monthly payment.

It turns out that the modest investment of little more than a postage stamp per student saved millions of dollars in the aggregate. Students borrowed 11% fewer dollars as a whole, even though enrollment and tuition increased year over year at Indiana University's campuses. Eyes opened wide to the true cost of a college education, students realized that cutting back, working more, or dipping into savings, might be a better way to fund their studies.

A crisis that isn't
If a few thousand postage stamps and a few reams of paper can cut borrowing by as much as 11%, perhaps student loans aren't the problem we've made them to be. The problem might just be that students are completely incapable of tracking just how much they borrow, and just how much they'll owe -- a problem that could be fixed with a very minor investment.

Maybe, just maybe, before discussing foregiveness or deferral programs, we should attack the symptoms at their source: too much borrowing.

Student Loan Originations By Year

After all, in 2012, Federal Student Loan origination topped $100 billion. An 11% reduction would result in immediate savings of $11 billion in the very first year. And that doesn't even begin to include the additional cost of interest, fees, and finance charges that could be so easily avoided.

Perhaps we could go even one step further and include another page from another government agency, the Bureau of Labor Statistics, which tracks income and employment trends for virtually every occupation under the sun.

When combined, students will not only have a reasonable expectation of what they'll owe, but also what they'll earn, and the ease or difficulty with which they'll find a job. And it comes all at a cost of pocket change per student, which, compared to the average tuition at even the least expensive of state schools, is a mere drop in the bucket. "Crisis" averted. 

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