May 29 was 529 College Savings Day as declared in House Resolution 333. The resolution’s intent is to increase public understanding and appreciation of the value of saving for higher education through the PA 529 College Savings Program.
The resolution accurately states that student loan debt is now the second highest consumer debt category, behind only mortgage debt and higher than both credit cards and auto loans. Among college graduates in the class of 2015, Pennsylvania graduates have an average student loan debt of $34,798 per student, the second highest average student loan debt in the country.
Indeed, participation in 529 saving programs reduce the need for borrowing. There are clear steps that policymakers can take to provide more help, at the state and federal level, to support students.
Here are three recommendations:
• Need-based grant aid, such as federal Pell Grant Program, helps alleviate the amount of debt students must assume to attend college.
• Support of repayment approaches that reflect borrowers’ realities such as income-driven repayment (IDR) plans that allow struggling borrowers to customize loan repayments.
• Making refinancing possible for both federal and private student loans, the same way borrowers can refinance other financial instruments.
The student debt crisis is also a gender problem, costing women even more than men. AAUW’s new research report, Deeper in Debt: Women and Student Loans, finds that women hold a whopping 64 percent of all U.S. student debt. A total of $833 billion compared to $477 billion held by men.
And although a college degree generally leads to higher earnings, women with college degrees are still paid 26 percent less than men with college degrees. The result is that women shoulder student loans longer than men, with black and Hispanic women facing particular financial hardship.
A college degree should open the doors to possibility, not bury students in debt.