Allow employers to get involved.
Despite the current mortgage meltdown and the commercial debt market contraction, there's another type of loan-making that will continue to occur this Fall --- helping students pursue a college degree. I'm glad it will. College is one of the great socialization experiments run in this country. It's also a place where millions of individuals make choices every year to become better equipped to contribute -- to the economy, to what matters to them in the world, to their families and to themselves. Attending college is a tremendous investment in making individuals, and as a result the globe, stronger.
Yet right when the horizon is brightest -- when a recent graduate can go into the world to pursue anything she wants -- the specter of growing loan debt kicks in, immediately constraining the choices of pursuit. Instead of following a path that she may most want to pursue, like transforming K-12 education, tackling nuclear proliferation, or starting an energy business, graduates are often forced to prioritize their efforts exclusively around income so they can pay rent, have a life and service their loans. The result is a stampede into hedge funds, investment banking, and __________ [choose any recent dollar-candy job]. These are great areas to work in to be sure. People should by all means pursue them if that's what they want to do, but not, however, because they feel that's what they are compelled to. Graduates with heavy debt to service face an unnecessary compromise that's unhelpful to themselves and the companies they don't really want to work at.
I'd like to suggest an alternative. The best companies are always looking for ways to make employment more attractive. We should allow companies to help repay student loans directly. Instead of asking graduates to pay with income that's already been taxed, companies could use pre-tax dollars to service employee education loan debt.
Who wins? Employers gain another way to attract highly-skilled candidates. Banks and the government see repayment risk reduced. Graduates for whom debt repayment looms large gain a greater set of job options to pursue. Who loses? Governments see a decrease in collected taxes from employees and companies. Yet the tradeoff creates incentives for an ever-increasingly skilled and more productive workforce, which ultimately protects and grows future tax revenues.
It's the third gain -- graduates can improve their option picklist -- that I believe has the greatest favorable downstream impact. When people can experiment with what they may most love to do, they increase the likelihood they'll find it. If they find it, they have the greatest chance at success. I want to live in an economy and among neighbors who are doing what they love. Don't you?