by Bob Hildreth
Whether you like it or not, Congressman Tom Garrett’s proposal linking student debt repayment with social security exactly demonstrates where we at. The student debt repayment crisis has reached such alarming levels that we are ready to ask our youth to sacrifice their future security for temporary relief from crippling present financial burden.
But before considering Tom Garret’s idea, let’s recognize that there is no elegant solution to this debt crisis: either the government will forgive large sums of debt, unjustifiably burdening the taxpayers, or we need some out-of-the box proposals like Garrett’s that will seek to recover some of the unpaid debt.
The Student Security Act of 2017 would give students the option of paying back their government loans with the money due to them in the future from social security. They would agree to delay receiving payments for up to six years and one month. With this, students would be able to pay a max of $40,150 of their student debt.
Graduates, discounting their need for social security due to their young age are likely to sign up. The immediate relief and ability to freely buy a home and a car, get married and have children, save and make plans for the future, all without having to worry about their student loans is going to be very attractive to many.
This would also save some money for the social security system. In fact, Garrett estimates that Social Security could save about $700 billion over 75 years which would make up about 10% of the funding the system needs to avoid bankruptcy in the future.
An important question is, are we trading one crisis for another? Will we end up with a sizeable percent of our future elderly population pushing their retirement needs into their 70s before receiving social security paychecks?
Meanwhile, this proposal does nothing to prevent new student debt. If anything, it bolsters the student debt system. It will encourage colleges to continue raising tuitions. We need to recognize that the loan program provides an important subsidy to college allowing them to increase tuition with impunity. If we are ever to reform the college finance system, we have to start by first controlling tuition.
Nonetheless Rep. Garrett’s idea is innovative and brave because it touches the third rail of American politics — the social security system. Keep thinking Congressmen!