A National Service Corps Can Solve the Student Loan Crisis


• Military: Since members of the military risk the most, I think they should get a full ride after just three years of service.

• Philanthropic: The NSC should place people in organizations like the Peace Corps, AmeriCorps, and other service oriented entities.

• Public Service: The NSC should place people in roles that support the construction and maintenance of American infrastructure and communities. Law enforcement. Firefighters. Construction workers. National Park employees.

• Placing these individuals would drastically alter what it means to work in the public sector, but it's doable. Just as all government agencies must allocate a certain percentage of their private-sector contracts to minority-owned enterprises, participating agencies would be required to draw a set percentage of workers (no matter the skill level) from the NSC.

Essentially, these are real jobs for lower-than-typical pay in exchange for college tuition so they are competitive. Participants are able to replace benefits normally associated with such jobs–such as pension–with tuition credits. Job security, advancement and pay are merit based.

But the devil is in the details, and there are a lot more details to cover. Could the NSC be part of the Department of Labor, or would another agency be better? Can this be funded entirely (or to a large degree) by merging existing program budgets as well as position set-asides in various federal, state and local government agencies? And how can we help students make prudent decisions about what and where to study?

In securities law, brokers have to sell investments that are suitable to the financial circumstances and experience of their customers. This means not selling highly speculative growth stocks to widowers living on modest fixed incomes. The NSC would work in a similar way, requiring school guidance counselors to address the suitability of a prospective borrower's choice of college and curriculum, in terms of their academic abilities, financial standing, and the likelihood that a loan will be repaid should one be necessary.

Choices would not be dictated by these reports. The purpose is to ensure that everyone who seeks financial assistance, whether it's via a student loan or the National Service Corps, has at least talked to a professional about that choice.

[Related Article: Crowdsourcing the Student Loan Mess]

I realize that this will be somewhat controversial since there is serious talk about whether most guidance counselors have the chops or the bandwidth given the many tasks and distractions they face each and every day. In other words, we'd need lots more guidance counselors, and they'd have to provide real guidance.

Furthermore, the Great Recession of 2008 was caused by a woeful lack of financial literacy. The centerpiece of the Dodd-Frank Act is the Consumer Financial Protection Bureau. One of its core missions is to help Americans learn something about the intentionally complicated financial transactions they are tricked into by savvy bankers.

A similar initiative should exist to teach kids about the loan they will have to live with for most of their lives. The material offered would require disclosures from loan providers and schools–in plain English–so there could be no mistake as to just how burdensome the prospective student's plan is, or will become, over time.

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