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Manage student debt with public-private partnerships [Commentary]

Student debt has grown to over $1 trillion in the United States and is continuing to climb. In fact, seven out of 10 undergraduates graduated with some form of student debt in 2012. Such enormous debt is likely to trigger another financial crisis as young adults and recent graduates struggle to pay back their loans.

The federal, state and local governments have taken a number of steps to provide aid in the form of scholarships, grants, loans and repayment assistance programs. In Maryland, for example, the state's Janet L. Hoffman Loan Assistance Repayment Program provides loan repayment assistance for graduates working in high needs areas in targeted fields such as medicine, education and law. In Fiscal Year 2013, 193 awards were made through that program; loan repayments totaled more than $1.2 million, with an average award of roughly $6,400 per recipient.

Policies have also been adopted to curb the rising cost of college tuition. But these initiatives are insufficient to control the mounting debt facing current college students, and some students are discouraged from pursuing a college education altogether in the face of undertaking large student debt. Student debt has also been shown to take a negative toll on the economy by, among other things, preventing some from qualifying for home loans and saving for retirement.

While the public sector has attempted to confront student debt, it has not sufficiently engaged the private sector to address these issues. Companies should offer their employees assistance in loan repayment — in addition to any college tuition assistance program. By adding loan repayment to tuition reimbursement programs, employers can help cover both past and future costs of education incurred by those employees pursuing higher education. There are approximately 1.3 million corporations with 25 or more employees in the U.S., and if significant numbers of these companies provided such programs, the student debt crisis could be reduced by 30 percent to 40 percent of the current student debt. Employers would likely reap the benefits of loyal, appreciative and productive employees who are less stressed and would not require supplemental part-time employment to pay back loans.

Such employer driven programs could have a greater impact and become more prominent if implemented in collaboration with the state through public-private partnerships, and if offered simultaneously as benefits available to all workers. For instance, the public sector can provide incentives, such as tax benefits or preferential procurement points for companies that offer student loan repayment programs to qualified employees. Engaging major trade associations such as the American Council of Engineering Companies (engineering), the Water Environment Federation's Annual Technical Exhibition and Conference (environmental), the National Association of Manufacturers (manufacturing) and the Transportation Research Board (transportation) would raise awareness and encourage industries to develop and implement these programs.

According to the Institute for College Access and Success, in 2012, the average Maryland college or university bachelor's degree recipient had $25,951 in student loan debt at graduation. Even modest monthly contributions from employers could shave years off of repayment and save students thousands of dollars in interest. Using the Janet L. Hoffman Loan Assistance Repayment program as a model for private companies could greatly reduce the amount the average Maryland student would pay back in interest and the time it takes to pay back to loan overall — to within five years. While these incentives may have costs in the short run, they will greatly benefit the future of Maryland's economy and workforce.

Anwer Hasan is chairman of the Maryland Higher Education Commission. His email is

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