Student loan debt is a serious concern for both the Federal and State governments as it limits the amount of money in consumer pockets and is now showing that it is slowing economic growth potential in one of the largest young populations in history. There has been discussion on tacking the 1.48 trillion dollars in 2018 of student debt by wiping it out. We can see an example in Wisconsin that leads us to consider potential solutions for Michigan and other states when it comes to lowering student burden and bringing skilled workers to small declining towns.
Wisconsin reimburses up to 40% to a maximum of $25,000 for living in up to 72 counties. This helps move people to such rural areas in a way that helps declining farm towns and rebuild local economies.
There are other ways in which Michigan and the country can use student loans to help create higher levels of economic growth as well as reduce the overall debt without "wiping out" loans. The goal is to maximize the overall benefit to the states and the country through thoughtful forgiveness programs.
Let us consider a very robust student loan forgiveness and repayment plan that incorporates debt reduction with economic development. We may be able to see the benefits of student repayment and debt reduction programs for rural communities, certain needed occupations, military veterans, public service, volunteer work, training and education programs, public works, and much more.
Consider an example. Let us say my small town of Gladstone Michigan is declining in size with an aging population. They are in need of younger families as well as skills in metallurgy/mining, forestry, entrepreneurship, ecotourism, and healthcare.
It is possible to provide loan forgiveness for graduates that move into the area, additive loan forgiveness for being within certain demand oriented occupations, and additional loan forgiveness spanning up to 5 years for starting a business or setting roots down in the area.
Why might this help? If we are seriously discussing complete loan forgiveness, lack of people skilled nationally in certain occupations that limit economic growth, and declining rural communities it is possible to beef up these loan forgiveness programs in a way that helps the economy, the student, and industries grow.
We know we need skills to keep the economy growing. At present the labor market is tight with low unemployment, forcing industries to use immigration as a tool, and pushing up costs. Economic growth opportunities are limited without the labor needed to fulfill the jobs and growing industries. It would make sense to "hit multiple birds with one stone" if we consider a debt forgiveness program that encourages people to contribute to society in a maximum way possible.
Currently, Michigan has two major debt reduction programs that include working as a public defender and healthcare professionals. Administrators should consider a program like Wisconsin's but much more robust in its ability to reduce debt and encourage economic growth. While the public works programs were a good idea during the Depression, loan forgiveness might be a good idea in an improving economy. To effectively pull this off we will need partnership between State and Federal entities to rethink how to maximize the benefits of reducing student loan burdens while helping people and communities.