Today’s college graduates often have significant amounts of student debt. (Lawrence Sawyer/E+/Getty Images)
After more than three years of suspension of payments and interest, initially brought about by the coronavirus pandemic, and then a bitter political battle that finally escalated.
Supreme Court: Anyone with student loans will have payments resumed on October 1 and will begin paying interest on those loans.
With student loan interest rates reopening, it’s time to seriously consider interest-free student loans as a viable solution to making education affordable for everyone. The cost of attending college has more than tripled in the past half-century, with interest rates on student loans as high as 7.5%, and the price of getting a college degree, once compounded, has increased over the life of the loan. could easily double over time. Over time, repaying these loans can help individuals buy a home, save for a child’s college education, plan for retirement, or create other wealth. may be hindered. This is especially true for historically marginalized first-generation college students, who are more likely to face financial barriers when attending college and have less access to wealth-building opportunities.
Getting an education shouldn’t be a privilege, and the decision to get a college degree shouldn’t leave you in debt for the rest of your life. Furthermore, the burden of taking on large loans with no repayment plan and the potential for those loans to double over a lifetime should not be on the shoulders of recent high school graduates.
But there is a simple solution to keeping the cost of college within everyone’s reach. It’s an interest-free student loan. Interest-free and fee-free loan options offer affordable student loans that can be repaid without interest charges, allowing students to focus on their education, establish their careers, and build wealth without worrying about the effects of compound interest. You can build opportunities. . Student borrowers repay only the principal in monthly installments until the loan is repaid. This significantly reduces the amount of debt that students accumulate, while also reducing the financial burden on borrowers.
Interest-free loans are already working on a small scale in communities across the country, and successful models already exist. The nonprofit interest-free lending organization that I lead here in Los Angeles has been doing this successfully for almost 120 years. Thousands of college students have successfully borrowed and repaid their loans, and our default rate is 1% compared to the national average, which has consistently hovered around 10% before coronavirus.
Implementing interest-free lending at scale requires collaboration between governments, financial institutions, philanthropy and the wider community. By leveraging public-private partnerships, we will establish a dedicated fund to finance interest-free student loans, ensuring equal access to education regardless of socio-economic status. Imagine what a massive interest-free loan program with trillions of dollars in loans could do to end the student debt crisis and educate Americans.
To reduce the burden of student loans and create opportunities for all young people pursuing higher education to develop their talents, pursue their dreams and make a meaningful contribution to society by introducing interest-free student loans nationwide. I can.
Rachel Gross is executive director of the Jewish Free Loan Association of Los Angeles, where she has worked for 21 years to achieve a fair distribution of interest-free loans.
