College debt is destroying too many lives

College Loan Glut Worries Policy Makers

​It would seem to some this is a feature not a bug.

​More below.

After 2011, 90 day delinquencies in credit card debt, auto loan debt, home equity debt, and mortgage debt all began falling, at the same time student loan debt delinquencies rose dramatically, and then plateaued. During the last 20 years there has been a tremendous push to matriculate as many high school graduates to college as possible. This massive increase in demand for college had the expected result of driving tuition prices through the roof. In addition, the federal government has constantly increased student loan allowances, and the colleges have made sure tuition raises have consumed all of the available loan monies. 

The result has been a dismal failure.  

"New research shows a significant chunk of that investment backfired, with millions of students worse off for having gone to school. Many never learned new skills because they dropped out—and now carry debt they are unwilling or unable to repay. Policy makers worry that without a bigger intervention, those borrowers will become trapped for years and will ultimately hurt, rather than help, the nation’s economy."

Of course, the answer is more intervention. Government never found a problem for which money was not the answer, other peoples money.

And with 7 million in default and millions more on the way, Treasury Deputy Secretary Sarah Bloom Raskin wants “. . . to stabilize this generation of student borrowers and revive their prospects for the future. I think students are essential to our future economic growth and contributions to productivity.”

Perhaps the better thing would be to create a bankruptcy mechanism by which they could legally escape this burden, you know like we have for all other types of debt. Then you, the government would need to make sure that the colleges have skin in the game from now on, perhaps by requiring they cosign part of the debt, perhaps 25-30%. This would make colleges think twice about the federal loans student are receiving, particularly those in low value degrees. 

"It has already put forth an array of programs to help borrowers, including slashing monthly bills by tying payments to incomes, and forgiving some of their debt. But this time they face a different challenge: How to get borrowers to pay anything—even a penny—for an asset they never received."

I am old enough to remember when this was considered fraud. But today it is just what we expect from education. The good thing is the kids do learn all about recycling, global warming, and the proper pronouns to use for the 182 different genders on might encounter in the campus environment. 

All for $25,000 per year public college, and $60,000 per year private! What a deal.