3 Out-of-the-Box Proposals to Fix the Student Loan Mess

Education gurus push novel solutions to the debt problem.

The numbers are eye-popping. Student loan debt in the U.S. now stands at $1.1 trillion, with a current rate of default approaching 15% for loans within three years of beginning repayment. Still, fears of a crisis on the order of the recent mortgage meltdown seem overblown, with two in five borrowers on the hook for less than $10,000. What’s scary is that you don’t need an exorbitant loan balance to face financial hardship. The highest rate of late payments is among borrowers with outstanding loans of less than $5,000, says Beth Akers, a fellow at the Brookings Institution. Clearly, the current college-financing system is in need of repair, if not outright overhaul. To learn how to borrow wisely, see The Right Way to Borrow for College. For three out-of-the-box proposals to fix the student loan market over the long term, read on.

See Our Slide Show: 9 Ways to Reduce Your Student Loan Debt

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Anne Kates Smith
Executive Editor, Kiplinger's Personal Finance

Anne Kates Smith brings Wall Street to Main Street, with decades of experience covering investments and personal finance for real people trying to navigate fast-changing markets, preserve financial security or plan for the future. She oversees the magazine's investing coverage,  authors Kiplinger’s biannual stock-market outlooks and writes the "Your Mind and Your Money" column, a take on behavioral finance and how investors can get out of their own way. Smith began her journalism career as a writer and columnist for USA Today. Prior to joining Kiplinger, she was a senior editor at U.S. News & World Report and a contributing columnist for TheStreet. Smith is a graduate of St. John's College in Annapolis, Md., the third-oldest college in America.