If students default on their loans, there is no bad effect for the school

Promise or free tuition programs cropping up in some states are also worth examining, Perna said. New York, Maryland and other states have proposed new and expanded programs to pay college costs for eligible students. The movement toward these programs suggests an opportunity to think about how different sources of financial aid come together to ensure that all students have the financial resources that are needed to pay the cost of going to college.

Pell Grants, designed to help lower-income students, haven’t kept pace with the growth of tuition, and so over time, their purchasing power has declined, notes Perna.

An expanded income-based repayment system should be the standard for students, said Webber, with low payments or none at all for those making little money. It should be a little kinder to people at the lower end of the distribution but for people who are making more, it should be maybe not as generous as they are being right now. But we also want to provide a safety net for the people who didn’t get the same, whether it’s luck or whatever.

If you are getting the benefit of a college education and get a job that pays you a lot of money, you took out the loans, you should be paying for it

Right now there is, frankly, very little accountability that schools have; they practically have no skin in the game.

The other big policy change Webber would like to see is substantially increased accountability for one of the major players in the student loan system: schools

A risk-sharing system that penalizes schools turning out students with higher default rates – by charging schools, say, 5% of the defaulted amount – would nudge the system in the right direction. If [schools] are doing a lot of damage to students and also the taxpayer – because when students can’t pay their loans it’s the taxpayer who pays – then those schools should be weeded out of the system, said Webber.

Other larger economic trends could alleviate pressure on student-debt holders over time, depending on who they are. Keys points out that younger student-debt holders who may be delaying milestones like marriage and a first home purchase might get extra help later Texarkana payday advances. The other piece of this is generational, he said. It’s the baby boomers and older cohorts who have the vast majority of wealth, and eventually millennials will inherit some of those resources. Whether they will be behind their parents and grandparents in terms of improved standards of living is an open question.

Right now there is, frankly, very little accountability that schools have; they practically have no skin in the game. Douglas Webber

Whether or not to avoid incurring debt, students today are focused even more on the job market in choosing college majors, said Wharton management professor Peter Cappelli, director of the school’s Center for Human Resources. That’s not a great thing because it is very hard to predict which jobs will be hot, and using college just as the basis for getting your first job makes it a poor investment over the lifetime.

The hope on rising student debt was that the economic upturn would start to take care of the problem, said Cappelli. It certainly helped, as there are more jobs and fewer graduates whose loan debt keeps growing while they have no ability to even make payments. The lack of income growth, though, especially for those at the bottom of the ladder – as many students are when they start out – is the main problem now. For many students, they can make their payments but do little else: They can’t buy houses or start families.

Why worry about any of this? What is the larger public benefit to promoting a more advanced level of education in the populace generally?

That value has only risen in recent years. In 2002, a bachelor’s degree holder could expect to make 75% more than someone with just a high school diploma, and nearly a decade later that premium had risen to 84%, according to the Georgetown University 2011 study The College Payoff: Education, Occupations, Lifetime Earnings.