Opinion: Here are some solutions to Michigan's student debt

Michigan students seeking to further their education and earn a college degree are increasingly facing unaffordable costs. In fact, as a recent LendEDU report on student debt revealed, average student loan debt in Michigan increased 42.84% on average between 2007 and 2017. 

As debt burdens rise for Michigan grads, it’s become especially urgent for lawmakers on the state and national level to take steps to ensure young people understand the lifelong implications of taking on substantial debt. It’s also incumbent upon lawmakers and financial administrators to find ways to help students better afford education while avoiding massive amounts of debt.

LendEDU reviewed debt data from more than 900 schools across the United States, including public and private institutions in Michigan, and found the average debt-per-borrower figure in Michigan increased $9,268 from 2007 to 2017.

Increases occurred at both public and private institutions in Michigan. At the University of Michigan, for example, students saw an 8.24% increase in average debt per borrower over a decade while Lawrence Technological University students saw an 11.46% increase, and Andrews University students saw a 12.27% rise.

If these sharp increases continue at a similar pace, more students will be priced out of attending school or will leave college with unsustainable levels of debt that affect not just their own wallets but also economic growth in the state.

Lawmakers can look to student debt policies in other states to fix Michigan’s problems, adopting policies that have worked to help students.

For example, Michigan could pass a student loan bill of rights. In 2015, Connecticut became the first state in the U.S. to pass one such bill. The legislation instituted licensing requirements for loan servicers and tightened regulations to prevent servicers from misleading borrowers. Illinois, California, Oklahoma, and Washington State have since followed suit.

Or Michigan could set up its own student loan refinancing authority. Massachusetts established an Education Refinancing Loan called mefa that facilitates refinancing student loans to make repayment easier and help save borrowers money. Michigan could follow this model to create affordable solutions for students looking to simplify repayment and lower repayment costs.

Lawmakers could also appoint a student loan ombudsman. A total of 11 states have appointed advocates for borrowers to help them address complaints with loan servicers. The Michigan Guaranty Agency has an ombudsman that currently investigates student loan complaints, but a dedicated student loan ombudsman could provide more comprehensive assistance. 

Another solution is for the state of Michigan to provide more scholarships and grants. While there are some scholarships available exclusively to Michigan students, including the Michigan Tuition Grant, the state could significantly expand sources of free funding to make tuition costs more affordable and to reduce the need for borrowing.

Michigan could implement income-share agreement programs and incentivize schools to adopt such programs. Income-share agreements are contracts between students and schools in which students receive funds from the university and, in exchange, agree to pay the school a percent of their salary for a certain number of years after graduation. Since payments the school receives would rise as income goes up, this would ensure the interests of schools and students are aligned.

Finally, Michigan could expand state student loan forgiveness programs. The state provides some loan forgiveness programs including the Michigan State Loan Repayment Program and the John R. Justice Student Loan Repayment Program. However, forgiveness is limited to a very limited number of students, such as medical school or dental school graduates working in Health Professional Shortage Areas. The state could expand student loan forgiveness options to cover more students who do various types of public service work.

Christy Rakoczy is an experienced personal finance and legal writer who has been writing full time since 2008. She earned her JD at UCLA and graduated from the University of Rochester with a degree in media and communications.