Will Trump fix student loan crisis? Conservatives should address mounting debt. | Opinion
By embracing market-friendly solutions, Republican leaders can address the student loan crisis while maintaining conservative fiscal principles.
With more than half of Generation Z Americans in college now or in the recent past, and with many of them collecting student loan debt, the current political and economic climate demands a pragmatic solution to the cost of an education rather than progressive fantasies.
The Biden administration’s attempts to cancel student loan debt through executive orders ran into numerous legal problems, with the Supreme Court striking down a plan to forgive up to $400 billion. In the waning days of his administration, Biden also withdrew proposals to cancel debt for those with a history of repayment and other financial hardships.
All the while, 42.7 million federal student loan borrowers sit in limbo after they anticipated that Biden would resolve their debts. With $1.7 trillion in outstanding student loans, the ticking time bomb of student debt threatens the economic stability of millions of Americans (particularly younger generations).
Fiscal conservatives need to address student loan debt
Advocates of fiscal prudence, mainly on the right, must establish responsible, sound solutions in contrast with those offered by the past administration.
One promising approach has emerged in Pennsylvania, where Gov. Josh Shapiro has proposed a targeted tax strategy. Starting this year, Pennsylvania taxpayers can deduct up to $2,500 of student loan interest on state taxes.
That model provides an incentive for borrowers to make loan payments without the grandiose expenditure of Biden's cancellation proposals. The Shapiro approach promotes education through the tax code in the same way child tax credits support family formation and mortgage interest deductions enable homeownership.
Conservatives have often dismissed student debt as a problem that primarily affects liberal arts graduates. The answers offered to debtors have been overly simplistic: Go to community college or pay off your debts yourself.
But that perspective overlooks the broader economic implications. College-educated Americans enjoy substantially higher lifetime earnings than non-college educated Americans. Yet, they face difficulties in starting families and launching businesses in part due to the challenges of paying off student loans.
Student loans outpace credit card debt
The scale of the student loan crisis is significant. Since 2011, student loan debt has outgrown auto loans and credit card debt.
And the financial impact extends beyond individual borrowers. When students default on loans, taxpayers ultimately bear the cost.
Personal financial accountability is crucial, but telling graduates to simply “budget better” fails to address the fundamental cash-flow challenges facing recent graduates. Starting salaries often squeeze recent graduates between the high cost of rent and steep student loan payments.
A compassionate conservative approach should recognize how unique economic circumstances require nuanced policy solutions. State-level tax policies in the vein of Shapiro’s would give young people the opportunity to pay more toward their principal, expediting their path to becoming debt free.
By embracing targeted, market-friendly solutions like state-level tax deductions or credits, Republican leaders can address a critical economic challenge while maintaining conservative fiscal principles.
The political calculus is clear: College-educated voters represent a demographic that Republicans have struggled to attract amid broad gains with working-class voters. Offering substantive solutions to student loan debt could help bridge this electoral gap.
Addressing the student loan crisis requires moving beyond partisan campaign rhetoric and blame games. Whether through tax deductions, refinancing options or other market-driven approaches, conservative policymakers must recognize the long-term economic implications of inaction.
Sam Raus, a recent graduate of the University of Miami, is a Tech and Consumer Freedom fellow with Young Voices. Follow him on X: @SamRaus1