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To humor myself, I just spent the last five minutes retaking the student loan entrance counseling quiz that I had to take prior to taking out approximately $120,000 in student loans. By my calculations, it is the most worthless, mind-numbing experience of my academic career and financial life. Anyone who has ever been through it may agree – student loan entrance counseling is a joke.

Student Loan Entrance Counseling: Built and Designed for Morons

In order to take out federal student loans, students are required, by law, to complete entrance and exit loan counseling. When you think of counseling, you typically think of sitting in a room with a person discussing the challenges you face. Well, let me tell you, student loan entrance counseling takes a totally different approach that would be an embarrassment to anyone in the history of the counseling field. Here is what it takes to get an enormous amount of debt:

1. Click through the instructions and pick your school
2. Read sixteen web pages of text
3. At the end of each page, answer one or two questions (the answers are above the questions)
4. Get the questions right or wrong (it doesn’t matter whether you learn anything or not)
5. Confirm that you have read the Borrower’s Rights and Responsibilities Statement
6. Click Submit

And you’re done! Oh yeah, if you need a little help, here is the answer key:

• For every True/False question, the answer is TRUE.
• For every multiple choice questions, the answer is ALL OF THE ABOVE

That’s it! You are now eligible to take out an enormous amount of debt, mortgage your future and take your spot in line for a lifelong struggle with debt. Enjoy!

Bureaucrats Pretending to Be Lenders

If you taught driver’s education and one of your students never went to class, failed the written exam, got into three wrecks, hit ten children, and got a DUI during the driving test, would you give them a driver’s license? I doubt it. When it comes to taking out student loans, there isn’t much quality control. You could be drunk, dumb and dying and still find it within yourself to pass through the student loan entrance counseling process. It is pathetic.

Student loan entrance counseling is a prime example of the ineptitude of government to manage the country’s financial affairs responsibly. Rather than educating people about student loans and offering access to legitimate financial counseling services, the powers that be prefer to create a ridiculous, online alternative that any nincompoop can pass. With student loan debt surpassing the $1 trillion mark, you would think the government would be less interested making it easy for people to get more loans and more interested in educating, equipping and empowering people to become better borrowers.

Back in my days in banking, we had criteria by which we made lending decisions. Our credit decisions were all based on the 5 C’s:

• Character
• Capacity
• Capital
• Collateral
• Conditions

After completing the student loan entrance counseling process, I’m pretty sure none of those factors are considered. It seems to me that all you need to get a student loan and pass the student loan entrance counseling quiz was what I call the four P’s. You need a:

• Pulse
• Promise
• PC
• PIN Number

What is the Solution?

As the presidential candidates, Congress and the press debate over the student loan issue, there seems to be more people harping on the problems and very few offering viable solutions. If they are truly serious about fixing our student loan system, reducing the nation’s exposure to student loans and improving the financial futures of the next generation, there are a few key areas where they may want to focus:

• Lowering Default Rates – Perhaps measures need to be put into place to ensure that students have at least a couple of the 5 C’s before writing them a blank check to pay for college. Rather than demonizing everyone who has worked in financial services, now may be a good time for our country’s leaders to learn a few lending lessons from the people who have done it for hundreds of years.
• Educating Prospective Borrowers – Creating a system comparable to the driver’s education system in the United States may be a bit overboard. But directing resources toward financial education programs on college campuses may be a great way to improve financial literacy in America while lowering default rates.
• Supporting Current Borrowers – The infrastructure to support the millions of student loan borrowers does not exist. There are informal support networks, credit counseling agencies and financial education programs out there to help people with student loan debt. Perhaps now may be a good time to invest in building out our country’s financial education and counseling infrastructure so we can get back the $1 trillion we loaned out to students.
• Incentivizing Good Behavior – Remember when your parents used to give you $5 for A’s on your report card? Perhaps lawmakers should consider a similar approach to student loan entrance and exit loan counseling. If you score well, perhaps you get an interest rate reduction or some other incentive. They have similar incentives for setting up direct deposit. Why not give people an incentive to learn about the loans they take out as well?
• Making Education Affordable – The cost of higher education has more than doubled the rate of inflation over the last 10 years. What incentive do schools have to lower costs if the Department of Education is willing to give students unlimited access to loans? Higher education is becoming a luxury in America, and it is high time to focus on fixing the problem.
• Offering Competitive Interest Rates – It is cheaper for me to get a mortgage to buy a home than to take out student loans and go to school. What type of message does that send to the public regarding the value lawmakers place on education?

The Bottom Line

Our nation is facing a ton of financial challenges right now, not the least of which is its overexposure to student loans. Today, total student loan debt outstanding is greater than all credit card debt and car loans combined. That’s enormous. So rather than redirecting the conversation away from the real problems with student loan debt for political purposes, I challenge our country’s law makers to stand up and take action to solve this growing problem in America. Now is the time to quit your bickering, grow up and tackle this issue not as Republicans and Democrats, but as Americans. Our country’s future and the financial futures of millions of Americans depend on it.