CEOs were asked: School has just ended, and students are graduating — some with more debt than others. What should be done to alleviate the student debt burden in America? Should there be a mass cancellation? Should the laws be changed to allow student loan bankruptcies? Is it even an issue of concern for the economy?
Going forward, there need to be more ways for students to avoid taking on debt to pursue their educational goals. Scholarships, grants, local colleges and alternative training programs as well as less emphasis on “elite” school degrees. For those already burdened from exorbitant debt and interest charges, there should be some recourse as well as legal action against abusive practices to saddle students with too much or too expensive debt.
Jennifer Cramer, CEO, co-founder, The Spice Lab
America’s higher education institutions are the envy of the world. It is through our great universities that we foster innovation and accelerate our competitive advantage. Breakthroughs will continue to be born in our universities. Unfortunately, this dominance comes at a cost. Today, 69 percent of college students among the Class of 2019, took out student loans, and graduated with an average debt of $29,800, including both private and federal debt. In addition, 14 percent of their parents took out an average of $35,600 in federal Parent PLUS loans. Americans owe a staggering $1.56 trillion in student-loan debt, spread out among about 45 million borrowers. That’s about $521 billion more than the total U.S. credit card debt. This debt overload will continue to put an enormous burden on our youth and our ability to be competitive. We need to maintain our higher education excellence without allowing our students to incur so much debt. The solution, however, is not mass cancellation or student loan bankruptcies. That would be irresponsible.
The approach, in my opinion should be twofold. First, for the present loan holders: Make the re-payment schedule more affordable. Second, let’s promote innovation in how we approach education. Online learning will only get better and will allow more people to get an education. We are in an exponential era of information. There has to be a balance between maintaining the world-class universities and educating the masses at affordable levels.
Maurice R. Ferré, CEO, chairman, INSIGHTEC
It is a very complex subject with multiple factors and implications. In many cases, the debt is overly disproportionate to the immediate income earning potential, thus creating an unrealistic burden. That said, wiping out debt sets a poor precedence. I would suggest investing in lowering the cost of education and re-balancing.
Adriana Jaegerman, senior principal, managing leader, Stantec
In the U.S., the student loan crisis stems primarily from our unwillingness to reconcile the reality of a changing global and national economy with our own very American perspective: That people should “pursue their passions.” Post-secondary education — public and private — is now one of America’s biggest businesses. Public student loan resources are equally available whether a student is pursuing a commercially viable career which will likely permit loan repayment or undertaking studies with little or no realistic possibility of employment. Providing public student loans to those who are unable to repay them undermines the entire process and sustainability of the student loan program. Instead of giving student loans to those pursuing critically important but low-paying careers — there is no better example than education — why not provide public/private grants which do not need to be repaid? Anyone entering college today is certainly smart enough to realistically examine the marketability of their career options and make an informed decision.
José E. Latour, founding partner, LatourLaw
At more than $1.2 trillion, student debt is a major problem in the United States. I was fortunate to be in attendance at Morehouse College’s gradation when billionaire Robert F. Smith paid off more than $40 million of debt for the graduating class. The elation from the students and parents was incredible. Many cried. Imagine if all students had that same opportunity? They would have a remarkable head start in their careers that would truly make a difference for the rest of their lives. My hope is that policy makers will find a way to wipe out student debt and make it more affordable for students to attend college. A college education is the great equalizer and should be affordable for all.
Beatrice Louissaint, president, CEO, Florida State Minority Supplier Development Council
It’s a concern in that it can keep young people from more actively participating in our economy. Individuals are graduating with large amounts of debt before they even enter the workforce. Entry level employees are seeing a chunk of their wages go towards monthly student loan payments making it more difficult for them to start a small business or buy a first home which in turns affects different sectors of our economy. As a businessman, further incentivizing companies to adopt student loan reimbursement programs would be welcomed.”
Jorge Mas, chairman, co-founder, MasTec
There is no question that we have a serious student debt crisis in this country and that this will have a negative impact on our economy. The numbers speak for themselves — more than $1.5 trillion in student loan debt. Students want to go to college to ensure a better future, but yet the cost of college continues to rise significantly. It’s a “catch 22” for students; they have no choice but to incur thousands upon thousands of dollars in debt and when they graduate they are hit with the harsh reality that they now have massive debt and a heavy burden to carry. This crisis needs to be addressed head on with lenders offering more flexible payment terms, with more education about financial literacy and with government assessing this case-by-case to allow cancellation and/or a student loan bankruptcy option.
Melissa Medina, president, eMerge
Students should be able to work off their student debt through community service. A partial debt forgiveness program that offers discounts for timely payments can also help. But, for some former students, particularly those with chronic health challenges, the debt burden is so heavy and the prospects of recovery so low that debt relief is necessary.
John Quelch, vice provost, University of Miami Dean, Miami Business School and Leonard M. Miller University Professor
As someone who works with thousands of students every year, this is a topic that is very close to me. I’m not an economist, so I can’t speak to the implications of mass cancellation, nor the magnitude of the impact that it would have on the economy (of course, with $1.5 trillion in student debt, there will be an impact). What I can say is that this is one of the most pressing issues that young people face today in America. With these high levels of debt, many adults will not be able to save for retirement and will live paycheck to paycheck for decades. We need to look carefully at the cost of delivering educational outcomes. How can we innovate and deliver a high-quality experience at a fraction of the levels? The educational landscape is so entrenched that this will require a total re-imagination of how universities, new educational models (like bootcamps), and the federal and state governments work together. We also need to find new ways to innovate the way that we finance education. I am excited about Income Sharing Agreements (ISAs). With ISAs, instead of paying tuition up front, students pay back a portion of their income after graduating and securing a job. I believe that ISAs will help to lower student debt levels, and will align incentives between the educational institution and the student, which will decrease waste in the system.
Ariel Quiñones, co-founder, Ironhack
The enormity of student loan debt in our country is staggering, in large part because the cost of higher education is out of control. And, unfortunately, many of our young people have gone into debt for degrees they are not fully using because they are not working in their major fields, whether due to job scarcity, real-life preferences or other factors. But forgiving all that debt, or allowing bankruptcies, are not acceptable answers and send the wrong message to our grads. We have opportunity in Miami and throughout the U.S. to guide and mentor our younger generation to make more informed decisions on college and career choices. In addition, the loan forgiveness programs in place to reduce or retire student debt when providing public service in a career field or geographic location that is under-served should be expanded. Unfortunately, generous offers like the one Robert Smith recently made set a stellar example of “Paying it Forward,” however, it is not the long term solution.
Kelly Ramsden, managing partner, Office Edge and Legal Edge
Education is the vehicle for economic mobility, the essence of the American Dream. That dream, however, is only a dream for those who can’t afford college. Expanding the discharge-ability of student loan debt would result in an increase in interest rates, thus helping some at the expense of others. Student borrowers would be better helped by policies aimed at keeping interest rates low, growing the wages of the middle class, and making tuition more affordable.
Chana Sheldon, executive director, MOCA
THE MIAMI HERALD