06/07/2013 09:36 pm ET | Updated Aug 07, 2013

Student Loans: the Problem and Solutions

I'll start with the severity of the problem and then turn to solutions.

Defaults on student loans are looming as the next big financial crises facing the United States. With collective student-loan debt now totaling more than $1-trillion, analysts are telling us that the impact of such enormous debt could be even more devastating than the housing crisis we are still trying to work our way out of.

Please note that student-loan debt now totals more than $1-trillion dollars, that is, the number "1" followed by twelve zeros --$1,000,000,000,000. That figure is beyond comprehension.

Analyst Allie Bidwell points out the "domino effect" that this debt has on our already fragile economy--hindering borrowers' ability to qualify for home and automobile loans, to purchase household furnishings, save for retirement, pursue entrepreneurial ventures, and so forth." (The Chronicle of Higher Education on May 3, 2013)

Another reporter for the Chronicle, Stacey Patton, writing on May 9th, focuses on the growing default rate and that repaying these loans is not only a problem for recent graduates, but also that adults ages 60 and older are seeing their Social Security checks garnished because they fell behind on student-loan payments. The total amount of outstanding student-loan debt among people over age 50 reached $155-billion in 2012.

Many possible solutions are being proposed by government officials and educational consultants. They include such proposals as keeping interest rates low, having very liberal payment policies, offering more online courses, and reducing the standard number of years for a college degree from four to three.

In my opinion, these are flawed solutions. First of all, they all have the goal of making more loan money available so more students are able to attend college. There is too much emphasis on the need for everyone to have a college degree. There are an abundance of well-paying, significant jobs for tradespeople in many fields that require training and experience but do not require a four-year college degree--plumbers, electricians, carpenters, roofers, mechanics, assembly line workers, to mention only a few. Skilled workers support the very foundation stones of our economy and of life in general; they deserve our respect and have no reason to apologize for not having a four year degree.

Keeping interest rates on student loans low and having liberal repayment options are both worthy goals for assisting students with college debt. But these are not solutions for reducing the amount of debt students take on; these encourage borrowing more.

Furthermore, offering more online courses is not a healthy development for quality education. Students and faculty alike confirm that students learn more in traditional classes, where there are face-to-face discussions, than with online courses. I am not suggesting that all online class be eliminated. I am suggesting that they be kept to a minimum.

All statistics verify that the United States is falling behind other industrialized nations in educational outcomes. Reducing the number of classes required for a college degree and, therefore, reducing the standard time required from four years to three is not what the United States should be doing. If anything, we should be making college more rigorous.

So what is my solution? I know this is a very complicated problem that has many facets. Yet, it appears to me that there is one over-riding and obvious solution that most people are overlooking: concentrating on lowering the cost of higher education without reducing the quality of the education being offered.

Let's start by not paying ridiculously high salaries and benefits to college presidents and athletic coaches, and for goodness sakes stop providing lucrative buyout packages when they fail rather than just firing them. We could use these savings to pay the kinds of faculty salaries that will attract our country's brightest people to the teaching profession. I also suggest that as much endowment income as possible be used to provide scholarships to qualified students who, otherwise, are unable to come up with the needed financial resources without taking on unmanageable debt.

Finally, we need to put a stop to the current rage among colleges to compete with each other in providing "luxurious" lifestyles in their residential centers. It used to be that students looked forward to graduating so they could get out of the college dorms and rent apartments that provided a decent lifestyle. But not anymore! What they can afford after graduating now is not anything nearly as luxurious as their college living arrangements--resident centers consisting not only of living and study rooms, but also having one or more fitness centers, a swimming pool, and a dining room (in some of the larger ones also snack bars or fast food outlets). It used to be that colleges had a single swimming pool for the entire campus, a single dining room, one gymnasium available to the entire student body with a single fitness center, and so forth.

A big difference in education now is that the majority of parents to do not pay for their children's higher education expenses. They let their children become encumbered with levels of debt that are, in some cases, not possible to pay off. And the students do not realize until it is too late how difficult it is to make monthly loan-reduction payments and, at the same time, to be able to live reasonably decent lifestyles. And it certainly doesn't seem right for adults reaching retirement still to owe on their student loans.

So, this is my suggestions. Parents should borrow the money instead of the students. When I was young, parents paid for the education of their offspring, or the student worked his/her way through college, or a combination of both. If parents paid for college, perhaps they would take a greater interest in finding practical ways for colleges to reduce the ever-escalating cost of getting a college education.

I fully realize that having parents make the necessary sacrifices would also have a negative "domino effect" on the economy. But simply ignoring the problems relating to collective student-loan debt until the economy tanks will lead to a catastrophe of even greater severity than we experienced by ignoring the problems associated with out-of-hand collective home-loan debt.

The government, colleges, parents, and students all need to work together to solve this problem now. I don't have all the answers, but what I suggest is a very doable starting point.