In recent weeks, the call to cancel student loan debt has grown from Democrats. Even President Biden has expressed support for this idea. While it is true that student loan debt is a severe problem this country faces, much of the debate about how to mitigate this issue has left out an important consideration. So, what is not being talked about when it comes to the country’s student loan crisis? What is missing?
An often overlooked piece of the student loan puzzle is occupational licensing.
Reforming licensing laws could diminish the need for more extreme measures, like eliminating student loan debt, that would disproportionately support already well-to-do families and strain the country’s economy.
According to a study conducted by Mercatus Center at George Mason University, those who hold jobs that require occupational licenses and attended college are more likely to take out student loans and take out more student loans.
This is concerning as occupation licensing has gained popularity in our society. Licensed workers increased from about five percent of the population in 1950 to almost a third today. Occupation licensing now encompasses a plethora of professions ranging from barbers to lawyers.
What specifically connects occupational licensing to student loans? Occupational licensing has exacerbated the student loan debt problem because these licenses set minimum education requirements that have increased over time.
This increase in education requirements often escapes scrutiny but slowly increases student debt burdens. Take, for example, licenses that in 2002 only required an associate’s degree but now require a bachelor’s degree. This license has essentially just doubled the debt burden for anyone pursuing it.
Not only would licensing reform remove often unnecessary higher education requirements but would increase the available jobs for numerous families who could not have previously entered such professions due to high barriers of entry. Such benefits provide two new avenues of social mobility for the general public without creating any economic strain.
As licensing reform is the final barrier for many hopeful professionals, and it is woven into the student loan system, addressing occupational licensing would provide a much more feasible policy solution to address student loan debt than ideas currently being discussed.