David Baumer: ‘Win-win’ student debt solution

What a pleasant experience it was to read several recent articles by Timothy Ferguson and Mark Kurt, lawyer and economist, respectively, about college student debt and a possible solution.

As pointed out by Ferguson and Kurt in their June 25 Point of View “Link federal funds to grad rates,” the $1.3 trillion student debt has ancillary consequences that not only blight the future of the millennials but diminish investment in productive capital assets.

Under current law, most student debt is nondischargable, meaning that it is not extinguished if the debtor files for bankruptcy.

The genius of the Ferguson-Kurt proposal is that it transfers unproductive interest payments on student loans into productive investment into capital assets, such as housing, REITs and municipal bonds.

In other words, it is a “win-win” proposal. Students directly benefit through lower interest payments and lenders benefit because they become secured creditors on the assets purchased by the interest on the student loans.

Ferguson and Kurt have addressed a serious and growing problem and have proposed a viable solution.

Let’s have more substantive articles dealing with topics that affect many North Carolinians where real problems are addressed with proposed possible solutions. Enough about bathroom politics.

This story was originally published July 1, 2016 at 4:28 PM with the headline "David Baumer: ‘Win-win’ student debt solution."