With the Fourth of July just passed, this seems like a good time to bring some independent thought to bear on how to liberate millions of Americans from one of our country's major problems.

And to suggest a few ways to do this without setting off divisive disputes.

The problem I'm talking about is student loans. The numbers, as you likely know, are staggering. According to the Congressional Research Service, nearly 43 million US adults - one in six of us - have federal student debt, totalling about US$1.4 trillion (NZ2.1 trillion). That includes not only students, but also parents who took out loans to help their kids.


About $150 billion of those loans are in arrears or in default, and untold millions of borrowers are struggling to keep up their payments.

I sympathise, because back in 1966, I borrowed about $8,700 in current dollars to help cover the cost of getting a graduate degree in journalism. Paying it back in full and on time, which I did, was stressful - but was like a walk in the park compared to the problem faced by people carrying so much student debt they probably will never be able to pay it off unless something changes.

How should we cope with this problem?

Let me start by saying the one thing we should not do is to forgive all student debt, or even a major portion of it.


Because that's just not fair, and it would be terribly divisive.

It would enrage millions of people like my wife and me who made serious financial sacrifices to pay our kids' private-college costs for undergraduate degrees without us or our kids having to incur debt.

Lots of other people have had similar experiences or went to cheaper colleges to avoid piling up debt. Some did what I did and picked a one-year graduate program over a two-year program to save money.


Then there are millions of us who took out student loans, worked hard, lived frugally and paid off (or are paying off) what they borrowed.

Cancelling existing student debt would make many of us who scrimped and saved and were prudent and paid our debts feel like suckers.

That's something the so-called progressives who are proposing taxpayers pick up the student debt tab ought to think about.

If Sen. Bernie Sanders, I-Vt., or Sen. Elizabeth Warren, D-Mass., want to give away their own money to help indebted students, that's fine with me, but I don't want them to give away my money.

So what would I suggest?

For starters, let's change the law so student debt can be discharged in bankruptcy. As things stand now, you can be so far underwater financially you need a submarine, but you can't get rid of your student debt in bankruptcy the way you can get rid of unpayable medical or credit card debts.

Look, letting people get rid of their student debt by going broke isn't giving them a free ride. They're shamed, their financial foul-ups are public record and their credit is ruined for years.

Making student loans dischargeable in bankruptcy would put lenders at risk and make them pay attention to what they're doing.

Another thing we could do is expand the Public Service Loan Forgiveness program. That way, we could get a lot more people serving in the military or teaching in remote rural areas or practising medicine there, doing public service and having some of their student debt cancelled year by year.

Yes, that puts us taxpayers on the hook for cancelling student debt, but it's not handing people a debt-cancellation freebie: It's a trade. Do socially useful work, earn loan forgiveness. Sounds reasonable to me.

Finally, we should get colleges to bear some of the risk of student defaults. I don't know enough to make specific recommendations, but putting colleges on the hook would sure give them an incentive to police loans.

Who knows? Having their own money at risk might even prompt colleges to keep student costs down.

You'll notice everything I'm proposing involves shared sacrifice and shared pain, as opposed to inflicting all the pain on taxpayers by treating them as suckers or inflicting all the pain on people drowning in debt.

The Fourth of July celebrates the time we Americans combined forces, our internal differences notwithstanding, and gained political independence. There's no reason we can't do the same to help millions of Americans regain their financial independence.

- Allan Sloan is a columnist for The Washington Post.