re: I could consider a LIMITED student loan relief program, under one condition: Fix it.

This is my industry. I see it from the inside. There needs to be a total overhaul of the Federal Student Loan Program.


1. Return the actual lending to the banks. Make it similar to the SBA program. The government can guarantee 90% of the balance to protect lenders, but a student needs to walk into a bank, be able to present "here is what my major is, here is how much I expect to make, and here is how I expect to pay it back" to a loan officer rather than clicking through a bunch of pages on a website. Banks get a 10% origination fee for this.

2. Increase the Satisfactory Academic Progress requirement to keep receiving any financial aid. Right now, they are criminally low. After a freshman year, you can keep borrowing with a 1.6 GPA. Here's my solution:

Entering college: 3.0 High School GPA and at or above the state average on test scores.
after 1 year: 2.3 GPA and 20% progress toward degree
after 2 years: 2.5 GPA and 40% progress toward degree
after 3 years: 2.6 GPA and 65% progress toward degree
No standard aid available after 4 years
up to one additional year given if:
3.0 GPA
80% progress toward degree
STEM major

3. Raise the Household Income limit for Pell grants from $44,000 to $75,000 and limit the amount that can be borrowed to no more than 80% of the balance of in-state tuition, room and board minus grants and scholarships.

Example

Johnny is at LSU. He receives a Pell Grant of $6500 and a $10000 scholarship. LSU tuition, room and board costs $25,500. If he meets SAP, he can borrow $7300 a year. That's it. He or his family will have to come up with the other $1800 in direct costs and any other costs involved with attending school.

4. Open up work study to all students, not just the poorest students. Johnny can earn that $1800 plus a little money for Reggies by working in the library.

5. If a student graduates within 8 semesters (10 for certain STEM majors), then the interest rate for the life of the loan is capped at 1%. Late graduates and dropouts have to pay prime rate +1%.

Johnny's loan payment for 10 years is $255.

So on a typical student like Johnny that cant afford college without loans:

LSU has committed $40,000 toward his success
The federal government has committed $28,900 toward his success
Johnny and his family have paid $7,200 in direct costs + all extras
Johnny returns ~$1500 in interest and has a happy life