Document Type

Capstone

Publication Date

Spring 4-7-2026

Keywords

Education, education economics, education loan reform, higher education, student loans, student debt crisis, Saving on a Valuable Education (SAVE) plan, student loan forgiveness, Department of Education (DOE)

Abstract

This paper explores the origins of the student loan debt crisis and proposes tying university incentives to graduates' repayment plans and disclosing median earnings for degrees before students apply. Specifically, while there are numerous factors explaining why the price of education has increased dramatically since the 1970s, this paper proposes solutions that will specifically target university moral hazards by requiring universities fund: (1) the current subsidies to federal student loan repayments under income-driven plans as the House of Representatives intended before the Senate removed "risk-sharing," and (2) bankruptcy law discharge amounts. Moreover, requiring universities to disclose the median earnings of graduates for each degree they offer will enable consumers to make more rational choices and limit hyperbolic discounting. Finally, there are merits and demerits to outright student loan forgiveness, but regardless of economic considerations, political inertia will eventually be strong enough to pass broader loan forgiveness.

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