Editorial: Ease up on student loan borrowers

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Jaywalking is illegal. But cops don’t ticket much for jaywalking. They know that’s a waste of time and money when they’ve got bigger fish to catch.

So, too, with the federal government and young people right out of college. Why are the feds wasting time and money going intensely after kids who can barely pay their rent in this changing economy? We need a new system that helps students pay for college, but that doesn’t leave them in an inescapable financial snarl afterward.

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Right now, the government is spending money in the wrong places. BloombergBusiness reported Wednesday it takes federal debt collectors seven months to recoup what they spend on a 30-minute call to someone who is more than 270 days late on student loan payments. Collectors even went after a young woman jailed after an Occupy Wall Street protest whose debt on one of her student loans loan shot up 35 percent before she got out, leaving her more than $100,000 in the hole.

According to a 2014 report by researchers at Elon University and the University of Michigan, the federal government’s system of contracting out debt collection discourages contractors from taking the time to assist borrowers with distressed loans. Last year, the Consumer Financial Protection Bureau reported that sloppy practices by loan-serving contractors make it harder to repay loans, raise costs, cause distress and push struggling borrowers into default.

Why is this necessary? Young people right out of college are struggling to make a decent paycheck, certainly compared with Americans who got out of college 40 years ago. Meanwhile, college tuition has soared. Just between August 2003 and August 2013 it rose at twice the rate of inflation.

No former students who can afford to pay should blithely walk away from their loans. But the bigger question here is why we allow so many young people to be saddled with such enormous debt. As a group, student loan borrowers owe $1.2 trillion. Piled in a stack, those dollars would reach a quarter of the way to the moon. One in four borrowers is in default or struggling to stay current.

As a nation, we have to make higher education more affordable again. Some politicians, including President Barack Obama, have suggested free community college tuition. Jeb Bush has proposed replacing loans with a $50,000 line of credit to be repaid based on income. Other politicians are pushing for allowing especially hard-hit former students to discharge their loans in bankruptcy, like a bad car loan, something that’s nearly impossible to do now.

Any solution has to be affordable and not undermine the entire student loan system. But if not these ideas, then what? The current reality is unacceptable, in which college costs and their attendant loans are increasingly beyond the reach middle-income and lower-income young people.

Unlike jaywalking, that’s something that demands action.

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