To gauge if a degree is a worthwhile investment and avoid crippling debt, students should follow a simple rule: the total student loan amount should not be more than what they expect to earn in their first year of employment in that field.

The US Dept. of Education is proposing an accountability test: if a degree program's graduates don't earn more than comparable workers without that degree, the program could lose access to federal student loans. This directly links federal funding to a graduate's financial ROI.

A surge in student loan delinquency rates to double-digit levels indicates significant financial distress, particularly for the middle third of the income distribution. These borrowers are forced to prioritize essential expenses like housing over their loan payments, revealing a deepening affordability crisis.

To fix the student debt crisis, universities should be financially on the hook for the first portion of any loan default (e.g., $20,000). This "first loss" position would compel them to underwrite the economic viability of their own degrees, creating a powerful market check against pushing students into overpriced and low-value programs.

The new RAP plan bases payments on adjusted gross income. By filing taxes separately, a spouse with student debt can have their payment calculated solely on their own income. This can significantly reduce monthly payments, but requires weighing the benefit against losing certain tax breaks.

After a long forbearance period where many new graduates had never made a payment, the resumption of student loans saw delinquency rates spike to over 20%, more than double the historical 10% average. This reflects both immense financial strain and widespread confusion over repayment programs.

With the SAVE plan ending, borrowers who fail to choose a new repayment plan within 90 days will be automatically placed into a standard plan. This plan disregards income and splits the balance over a fixed term, potentially causing payments to skyrocket from $0 to hundreds overnight.

Blanket student loan forgiveness fails to address the root cause: skyrocketing tuition fueled by easy credit. A better solution is to force universities to have skin in the game by making them financially liable for a percentage of defaulted loans, which would incentivize responsible lending and curb price inflation.

Sheila Bair credits a Trump administration bill for major student loan reforms. It simplified repayment plans, eliminated negative amortization—where loan balances grew despite payments—and increased accountability for colleges with high default rates, providing a better path forward for borrowers.