A fire of growing student loan debt has been burning for quite a while now, with the latest estimate topping out at $1.7 trillion.
Washington has just thrown gasoline onto the fire with student loan relief. The Biden administration recently made the decision to forgive $10,000 in student loan debt, or $20,000 for Pell Grant recipients, for those earning less than $125,000 annually.
This isn’t the first, or the last, time that Washington is making things worse. Whether it is education, healthcare, you name it — the federal government is great at creating more problems.
We can’t expect Washington to get its act together any time soon. But thankfully, states can help control the fire. Occupational licensing reform can get at the root cause of ever-growing student loan debt.
Research that I did last year with Kihwan Bae uncovered a link between licensing to student loan debt. We found that licensed workers are almost 10 percentage points more likely to have borrowed for their college education and almost 6 percentage points more likely to have outstanding student loan debt than unlicensed workers. Moreover, licensed graduates borrow about $12,000 (or 38.5%) more and have student loan debt balances about $7,000 (or 42.5%) higher than unlicensed graduates.