How Student Debt Harms the Economy

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Hard to buy a house when one already has the equivalent of a mortgage attached to one’s name. Hard to start a family when the Sallie Mae payments take all the money for diapers. Hard to start a business when one enters the world already less than zero on the capital ledger.

Zero’s hard enough.

The problem is easy money to students. Think about it. Who in their right mind lends $50,000 to an 18 year old who has never had a real job, no credit history, etc? The federal government does.

We need to recalibrate the cost of college.The government needs to stop inflating prices. This bubble needs to pop.

(From The Wall Street Journal)

For instance, the U.S., despite its proud protestations about how creative and risk-taking it is, has fallen in multiple world-wide measures of entrepreneurship. A drop in such activity by the young is playing a part. From 2010 to 2013, the Journal reported on Jan. 2, the percentage of younger people who reported owning a part of a new business dropped to 3.6% from 6.1%. Over the past 10 years, the percentage of businesses started by someone under 34 fell to 22.7% from 26.4%. Common sense says that the seven in 10 graduates who enter the working world owing money may be part of this shift.

New data strengthens this hypothesis. Working with the Gallup Research organization, Purdue scholars devised last year’s Gallup-Purdue Index, the largest survey ever of U.S. college graduates. Among its findings: 26% of those who left school debt-free have started at least one business. Among those with debt of $40,000 or more, only 16% had done so.

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