Monday, January 6, 2014

Student Loan Debacle: What's Next?

2014 appears to be the year to address financial health.  Expert Nathan Dungan to Dave Ramsey to Fidelity Investments have declared 2014 the year of the conversation, the year to clarify and achieve one's financial resolutions, the year to get back on our financial feet.  But how can we address the student loan crisis - the trillion dollars of college debt held by US students (and parents and grandparents on their behalf)?

Unfortunately the student loan crisis (I prefer 'debacle') is here for the long haul. 'Crisis' typically describes a sudden horrific event (earthquake), a time of intense difficulty and chaos (health outbreak), or a turning point for decisions (divorce).  'Debacle' implies something broader; for example, the aftermath of a long-coming event (such as the stock market crash of 1929 or the subprime mortgage debacle).  A crisis effects your life, but a debacle effects the world (or at least a piece of it). We are dealing with a debacle.

Unlike a typical crisis the student loan debacle offers no sudden event from which to recover, no Red Cross to collect and distribute donations to help families get back on their feet, and no turning point decision option (e.g. bankruptcy). 

And the challenge remains as post-secondary education continues to be the cornerstone of a healthy career and a standard for a healthy domestic and global society.  Thus, financing higher education must be addressed as a larger issue, not just a how-to-borrow-the-funds-for-Bailey's-college issue.

As we begin to understand the long-term consequences of the student loan debacle, the stories of woe will expand accordingly.  So too will options  emerge, relief be offered, and hope return for future generations.  Over the next few weeks I'll post some thoughts and recommendations for roles essential to the recovery.  In particular I'll look at the role of:

  • Families
  • Higher education institutions
  • Employers
  • Legislation and Policy
  • Society
Stay tuned!  As always I welcome your comments and dialogue!