7 Ways to Fix Student Loans

We have a lot to say about how to fix student loans. We've written extensively about it and if you follow our CEO on social you know he's pretty passionate about it too.

Our recommendations are simply stated:

1. Share the burden: given how the cost of education, and subsequently student loan debt, has balooned over the last several years it doesn't make sense to expect folks to be able to afford to repay their loans alone.
2. Service better: every other day there is some news about how some unsuspecting borrower got bamboozled because their student loan servicer failed to do their job.
3. Lend less: guess what, no we don't need to be selling hope and lending people crazy amounts of money and sending them down a path of almost certain financial ruin. No. We. Don't.

Okay, we're pretty serious about fixing student loans. We're humans too. And we're aware how easy it is to get stuck in an echo chamber and loose touch with reality. Which is why we think it's a good idea to ask smart people what they think.

We asked 7 folks for ONE way to fix student loans. Here's what they said:

• Restructure Interest Rates
• Make the Employer Certification Form Easier to Complete
• Streamline Loan Management for Students
• Make Sure all Loan Payments are Properly Accounted for
• A Centralized Body to Regulate Student Loans
• Make Student Loan Cancellation More Transparent
• Income-Based Repayment

Yup, lend less and service better. We definitely gave ourselves a pat on the back. Here are their responses in full:

Restructure Interest Rates

One solution I see that is plausible is restructuring interest rates on federal student loans. These rates accrued over time and reset annually (likely to increase every May based on the 10-year US Treasury Department's yield). If an undergraduate student takes out a loan at a reasonable rate of 3.06% this year, the following year, they’ll pay new interest rates (likely higher) if they loan again. The interest rates could increase from 3.06% to 5.2% in a span of one year as prices for everything are on the rise.

This has an even more significant impact on graduate students who can take out loans at higher amounts without any cap but pay higher interest rates. So instead of using the taxes to pay private companies for defaulted student loans, I think it would be better if that money goes into keeping interest rates on student loans minimum, so students can increase their capacity to pay off these loans.

Jeffrey Zhou, Fig Loans

Make the Employer Certification Form Easier to Complete

The U.S. Department of Education should simplify the process for people to certify their employment with a qualified non-profit or public service employer. The federal government should provide more information and a seamless way for loan borrowers to complete the Employment Certification Form. This way, those eligible for student loan cancellation after a set time of work for certain employers can go about this process quicker and easier.

Datha Santomieri, Steadily

Streamline Loan Management for Students

The federal government should make it easier for students to manage their loans. Currently, the system is too complex and hard to navigate. Students are often confused about what they owe and what they can expect from their loans, which makes it hard for them to pay back their debt. It would be helpful if there were fewer fees and penalties associated with student loans, so that students aren't penalized for making mistakes or falling behind on payments. This would help students feel empowered when it comes time to pay back their student loans, because they will feel confident in their ability to do so without having to worry about being penalized by an unforgiving system.

Shaun Connell, Connell Media

Make Sure all Loan Payments are Properly Accounted for

There are far too many cases of borrowers having their student loans transferred to another provider and paperwork lost throughout the process—this has led to confusion and payments not counting towards loan forgiveness. There should be an efficient system in place for borrowers to confidently make payments that are properly accounted for, especially while a borrower's loan service is switched.

Dan Gray, Kotn Supply

A Centralized Body to Regulate Student Loans

The federal government should create a central regulatory body for student loans. This body would be responsible for overseeing all aspects of student loan policy, including the creation of new regulations and their implementation. It would also serve as an intermediary between borrowers, lenders, and other stakeholders in student loan policy.

This central regulatory body would help to ensure that all parties involved in student loan policy have a say in how it is implemented. This would include both borrowers and lenders, who have often been left out of the conversation. Borrowers often feel frustrated by their inability to speak up about what they need from their student loans, while lenders have struggled to find ways to make sure they are meeting the needs of their customers while still making money. The central regulatory body would provide a forum where all parties could come together to discuss issues affecting them and find solutions that work best for everyone involved.

Tiffany Homan, Texas Divorce Laws

Make Student Loan Cancellation More Transparent

Student loan servicers should be required to create dashboards for public service loan forgiveness. This will allow borrowers to easily confirm eligibility, monitor their document submissions, and track the progress of their student loan payments. Transparency is critical, but the current infrastructure doesn’t make it so clear how to best take advantage of loan forgiveness programs. The federal government can help fix student loans by making student loan cancellation more transparent for borrowers.

Natalia Morozova, Cohen, Tucker & Ades P.C.

Income-Based Repayment

I would like to see the federal government offer a way for students to pay off their loans based on their income. Currently, student loan payments are a fixed amount that is set at 10% of your discretionary income. If you make $50,000 and have no other debts, you will pay $500 per month toward your student loans. If you make $100,000 and have no other debts, you will pay $1,000 per month toward your student loans. The only way to get out from under this burden is by paying down the principal loan amount or declaring bankruptcy.

I'd like to see a minimum payment of 1% of discretionary income (this would be similar to auto loan payments). This would allow people who make $50,000 to pay less than what they currently do (1% for them would be $500/mo.), but it would also allow people that make much more money than this to have a lower percentage than 10% of their income going toward student loans.

Amer Hasovic, Love & Lavender