Easing the Student Debt Crisis

How a holistic approach can help


Left to right: Peter Mazareas, Joel B. Carstens, Randy Hardock, Consuelo Mack

The cost of a college education continues to rise, increasing beyond the growth rates of inflation and wages. Students and parents seek assistance and direction as they navigate the process of starting, planning, preparing and saving for college. As college debt creeps upward, people are questioning the value of college and the level of debt.

At the same time, federal and state investments in higher education have decreased, meaning that funding has to come from other sources in order for colleges and universities to operate. Consequently, schools have been raising tuition rates, and they have been quite high, particularly as state’s budgets were slashed in the wake of the financial crisis. The student debt crisis is very real, say panelists speaking about the topic at the 529 Conference.

Joel B. Carstens, university director of financial aid at the University of Pennsylvania, underscores that “3% to 4% of the median borrower’s income is going to pay for student loans,” which is the same as it was a generation ago. He emphasizes the need to find better solutions for funding higher education, as well as to foster partnerships between colleges and universities, federal and state governments, and college savings investors and experts.

“Too many people don’t pursue higher education because of a sticker price,” Carstens admits. He adds that advisers need to make sure families and students are having conversations about their priorities and about starting to save. He says colleges and universities must be involved in this process, helping to match the needs of families with the appropriate resources to pay for education, and ensuring that students are being good consumers as they go along.

Carstens explains the ongoing push for an umbrella group within the financial aid industry, highlighting the appeal to allow limited borrowing on a student or cohort basis. “We know that students, if left to their own devices, will oftentimes choose more money than less without understanding this has a long-run or a long-term impact for them,” Carstens says. This points to the importance of ­educating parents and students about college ­savings, financial aid and debt.

Panelists discuss the necessity of improving the message portrayed to clients who are faced with paying for college tuition. “We’ve had the same message for the past 15 years, and it isn’t working,” says Peter Mazareas, Ph.D., co-founder of Invite Education. He highlights the 529 program, calling it the “single most generous provision Congress has ever passed for American families. Advisers and families aren’t aware of how good this product is.”

Randy Hardock, partner at Davis & Harman LLP and counsel at the College Savings Foundation, agrees that the 529 program is vital when it comes to saving. “The 529 plan remains the single most effective way to set aside money today to fund future college costs. And that will become more and more important because of these trends and because the federal government likely is going to do less and less to help families.”

Mazareas agrees, saying consumers are looking for solutions, advice and direction. “Solutions are not coming from the federal government and colleges. We need to empower the parents and the families. The industry has to start changing messaging and provide these tools and resources to help them through this college crisis.”

“If you’re going to make 529s work,” Hardock says, “you have to start young. You have to learn the lessons we’ve learned from retirement ­savings, which is regular contributions over time that you are not thinking about.” He says the long-term perspective is very much the holistic ­approach, which does not view the college ­savings and ­student loans problem as one that gets solved with fewer loans or more funding from federal or state sources.

Advisers play a significant role in helping clients benefit from 529 plans. Beyond the obvious—wading through the 90+ 529 Plans available to find a suitable Plan for the client–the adviser can help mitigate any potential tax liability and any potential student debt.

To get the full story on how 529s can help save for higher education, visit

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