We have written many times about the student debt bubble. It’s been popping for the past year or so. But things are accelerating.
It makes no sense at all that the government makes loans available to everyone who wants to go to college. Who would lend $50,000 or more to an 18 year old who has never held a job, maybe has never paid a bill, and who is interested in majoring in drama?
No one! Except the government.
No skin off the government’s nose though. It gets the money it loans out at nearly no cost at all and on the back end makes billions upon repayment. And the government is going to get paid. Student loans can’t be discharged in bankruptcy.
Meanwhile the colleges of our nation bathe in all this borrowed money. Professor salaries go up. Pensions are padded. New stadiums are built. Administrations are expanded.
The student though is left holding the bag in one hand and a diploma (if he or she is lucky) in the other hand. As he or she heads out into the world the “clink, clink” of the debt ball and chain is ever present.
(From The College Fix)
Vedder said federally subsidized college loans have forced tuition rates through the roof and wreaked havoc on college students’ checking accounts and future debt, but perhaps worst of all is how the program has hurt the very students it aimed to help: low-income ones.
“Federally subsidized loans, created sometime during the 1970s, were supposed to help poor young people get an affordable college education,” he said. “But, as the years go by, we have actually seen education become less affordable for poor people, not more affordable.”