Home > News > Could an Adopt-a-Loan Program Take a Bite Out of Student Debt?

Comments 1 Comment

The private sector adopts all sorts of things — highways, parks, medians, pets, pet projects — so why not student loans? With the right tax incentives, an Adopt-a-Student Loan program could help ease the current financial quagmire of $1.3 trillion in student loan debt.

Earlier this week, Starbucks announced a plan that will let any of its 135,000 employees go to college for free — as long as they meet the criteria outlined in the new policy. While many employers offer help to employees who want to get a college degree, and critics decried the finer points of the deal with Arizona State University, Starbucks deserves at least a tip of the hat as well as a wag of the finger.

The new Starbucks policy points to a willingness in the private sector to tackle the problem of financing higher education in America. And faced with a deepening student loan debt crisis, the private sector — corporations and regular citizens — can and should make it a top priority to get a handle on the growing problem of student loan debt.

President Obama’s recently announced plan to expand the repayment cap on federal student loans and Elizabeth Warren’s now-dead bill  that would have allowed 25 million Americans to refinance debt at lower rates both focus on the real-world impact of the student loan problem. In reality, both moves capitulate to the problem of graduation-to-grave debt. It’s time to stop making the prison-house of student loan debt more comfortable, and find a way out.

Instead, Adopt-a-Student Loan could be a big-picture solution, targeting the $1.3 trillion in federal student loans and loan guarantees, as well as the more than $100 billion in private student loans that aren’t federally guaranteed.

With an average $29,400 per bachelor’s degree, student loan debt impedes economic growth. Money that would otherwise be going toward a car, retirement and all the non-essential consumer expenditures that grow the economy are going toward debt instead. And while $30K is a lot of money, there are ways to get your arms around it — especially with a little help from the IRS, a friendly employer, or generous friends who see the upside of paying a college education forward.

Whether an Adopt-a-Student Loan program or free employer-sponsored education is the answer, only time will tell, but it’s time for Americans to step up with solutions. I’ve got a few ideas to start the conversation. Whether that takes place on Twitter, in the comments below, or at your dinner table: It’s time for all of us to step up and figure out ways to stop the debt.

What Businesses Would Need to Do

The Adopt-A-Student-Loan program should be relatively simple in its basic formulation. Businesses in the U.S. volunteer to pay one or more student loans of a current or prospective employee. The particulars could manifest themselves in any number of ways, but the bottom line is this: Businesses in America would begin to help solve this crisis very directly.

Granted, the incentive for such a scheme might be lacking from a CFO’s perspective, but consider the recruitment value in offering new employees help paying down their debt as part of their compensation package would be huge. It worked for Tom Cruise in “The Firm.”

Were companies given incentive in the form of a tax break, or even a tax credit, still more could be accomplished. For instance, they could adopt the debt of their employees.

The win-win of this Adopt-a-Student Loan program would take the form of focused employees who are loyal, which should have a huge impact on job performance and productivity. The extra cash in employees’ pockets would become revenue as it entered the economy in the form of increased spending.

Additionally, such a program would be both a boon to recruitment and retention efforts.

What the Federal Government Would Need to Do

Currently there is a $14,000 limit on non-taxable gifting, but that could be increased to facilitate this program, with the trigger being money that went directly to pay down student loan debt.

In addition to the possibility of an abatement or credit for corporations that pay down employee student loan debt, in addition a government abatement on the estate tax might be popular, allowing regular Americans to pay down a third party’s student loan debt before the taxable portion of an estate goes to the IRS. In fact, if the federal government used these types of tax breaks to take on this trillion-dollar time bomb, one can envision a system in which anyone could crowdfund their student loan debt. It may be a crazy idea, but sometimes it takes a crazy idea to solve a crazy problem… and our student loan situation has reached insane proportions.

Whether you advocate a Hunger Games solution or something more real world-ready, I look forward to hearing your ideas for ending the student loan debt nightmare, so the odds can be ever in our future graduates’ favor.

More on Student Loans:

Image: AndreyPopov

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

  • Shaquinkta Dunneau

    I think it could be as simple as asking people to give $1 to a fund to help make people living today a more educated people. I mean, if we all living want the world to be better, all living should help to make sure all are educated. If 1 million people gave 1 dollar to a fund, we can begin to pay off hundreds of outstanding student loans $50,000 and under. My current debt is $60,000 and that’s for a two year degree and a parent loan.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team