Individual / Personal

student loan crisis

If you’re old enough to vote, then you probably have a number of family members receiving Medicare and Social Security benefits. Is there something wrong with these programs? It seems like articles get published often on how to change these programs for future recipients. So let’s think about these programs for a few minutes. We’ll start with Medicare. You’ve worked hard your whole life. Perhaps you’ve held a number of different jobs, and all of us from every background in life – construction workers, truckers, florists, bakers, bankers, teachers (and the list goes on and on) – have contributed to Medicare. It seems nice to know that after you’ve worked for 40 or 50-plus years that at least some of your healthcare costs will be covered because you’ve paid into the “group coverage system” we call Medicare. I guess we could say the same of Social Security, that is, many would say “sure is nice that I’ll be getting my Social Security check when I’m able to retire.” An issue common to both of these programs is they’re not collecting enough money to sustain themselves indefinitely, which is a function of poor design and planning.

So how do we fix these programs? Well, whatever we do, let’s begin with baby steps, but let’s begin and stop debating. For example, some have said that Medicare’s administrative cost per “covered life” is more expensive than private insurance, which potentially costs us an extra $4 billion annually. It certainly seems better to save $4 billion than to waste it. So why not do a trial with some volunteers to see how it works out?

On the Social Security side, imagine a husband and wife retiring, signing up for social security and then going on a road trip. They haven’t even received their first check and then they are both killed in an auto accident. Well what happens to all that money they paid in? It stays in the Social Security system and the only thing their children get is a $255 one-time payment for each parent. Instead, what if each person “owned” their social security retirement account and they could pass on the value to their heirs, just like what happens with other assets – home, cars, savings accounts, etc.? Wouldn’t that be a better solution? It can’t really happen for current recipients, but it could for future recipients. Isn’t it worth taking a look at this and other suggestions for modifying Social Security for future beneficiaries?       

Moving on to education…what a hot topic! A recent position paper sums up Common Core as follows: “As evidence from both inside and outside the United States makes clear, centralization and control do not work; rather, freedom is the force that sparks educational improvement. Freedom unleashes competition, which, in turn, drives innovation and leads to specialization. The idea that there should be one monolithic set of standards and that everybody should move at the same rate makes no sense, as anyone who has met more than one child can readily attest.” You, I, and everyone we know are all different and learn in different ways and so are all our children. What’s the answer then? How about:

  • Letting teachers have the freedom to try different approaches geared towards the needs of groups of children whom they know better than someone in Washington D.C.
  • Let funding follow students so that parents can find schools that meet the unique needs of their children.

What about student loans? Many of us were fortunate enough to be able to complete our undergraduate education without having to take out any loans. That wasn’t the case when I went back to graduate school. I’ve got a rather substantial student loan balance, but the payments aren’t terrible because my loan rate is less than 2.5%. With tuition rates rising fast, many are forced to take out loans, even for undergraduate education. And while we can’t make college education free for everyone, Congress can at least spend some money to set loan rates that don’t crush students with sky-high monthly payments instead of giving foreign aid to China.

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