Get a group of recent college graduates together these days and it’s likely the conversation turns to one subject: student loan debt. 

It’s no wonder.  

Many people thought they were doing the right thing when they took on enormous debt to pursue a college degree – only to be left with a student loan balance they struggle to repay. It’s a financial pickle that not only hampers young people trying to start families and buy homes, but it ripples across our economy and government.  

That’s why all eyes were on the Supreme Court’s recent ruling on President Joe Biden’s plan to cancel hundreds of billions of student loan debt. 

Supreme Court halts Biden’s student loan forgiveness plan  

In Biden v. Nebraska, the court overturned Biden’s student loan forgiveness plan, which would have forgiven up to $10,000 of student loan debt for eligible borrowers, and up to $20,000 for Pell Grant recipients. Biden’s one-time student loan jubilee would have come at an initial cost to taxpayers of more than $400 billion.  

Biden’s one-time loan forgiveness plan was just the beginning. The Biden administration is currently enacting a new income-driven repayment plan that would forgive massive loan balances for student borrowers in the years ahead.  

It’s clear our system needs an intervention but asking all Americans to pay for the debt of a few is not the answer, especially when forgiving broad swaths of student loan balances does nothing to address rising college costs. In fact, student loan forgiveness drives the wrong incentives for colleges to raise tuition and students to borrow larger sums knowing they will not have to pay back their full loan balance.  

We need changes both in how we finance postsecondary education and what forms of learning we prioritize.  

Innovation is the key to a better postsecondary education system 

Our take is this: Spurring education alternatives and experimenting with innovative finance models results in a postsecondary education marketplace where providers better serve students and employers by competing on cost and outcomes. 

• More education options: A four-year degree works for some students to achieve their career aspirations, especially given that 70% of new jobs require a bachelor’s degree, despite the fact fewer than 50% of workers have one. But what if we made it easier for students to pursue accelerated skills training programs like Merit America or integrated work and learning options like Reach University, which lead to well-paying, fulfilling careers? Students could take advantage of more options to unlock their potential and find fulfillment, without taking on a mountain of debt.  
• A better way to pay: Traditional student loans limit learners to college pathways, leaving quality alternatives out of reach. Innovative finance models like income share agreements (ISAs) can be used to pursue college or alternative pathways and improve return on investment by limiting repayment amounts to a certain percent of a borrower’s future income, meaning if the credential doesn’t pay off as anticipated, a student may not need to repay the full cost.  

Stand Together partners take a leading role 

The Stand Together community partners with changemakers who are stepping up to counter Biden’s misguided forgiveness plans and chart a better path for making college and education alternatives more affordable and accessible:  

• Urban Institute published new research and Texas Public Policy Foundation published an analysis of the Biden plan, both showing how Biden’s new income-driven repayment plan essentially turns the federal student loan program into a grant program and could lead borrowers to take on more debt because of generous forgiveness terms.  
• American Enterprise Institute convened more than two-dozen policy and advocacy organizations to showcase new Urban Institute research. The convening was an important step to building consensus around misaligned incentives of the plan and alternative policy approaches. 

• Jobs for the Future and Better Future Forward are leading the charge on coalition-building to educate policymakers on ISAs and the policy and regulatory conditions that will enable these promising finance models to compete and scale in a fair marketplace. 

Learn more about how the Stand Together community is tackling issues with the American education system.