Student loans are leaving millions of Americans with really bad hangovers.
The huge spike in the cost of a college education has had a devastating effect upon educational opportunity. American student loan debt now totals $1.5 trillion.
Student debtors were, in many, many cases, persuaded to make poor financial decisions by their own government — which, as the owner of their debts, now stands to profit from those mistakes. By wiping the slate clean, Uncle Sam wouldn’t just improve the macroeconomy, but also increase its fairness, and reduce racial inequality.
This is the second in a two-part article on the debt burden America’s students face. Read Part 1 here.
The lending business is heavily stacked against student borrowers. Bigger players can borrow for almost nothing, and if their investments don’t work out, they can put their corporate shells through bankruptcy and walk away. Not so with students. Their loan rates are high and if they cannot pay, their debts are not normally dischargeable in bankruptcy. Rather, the debts compound and can dog them for life, compromising not only their own futures but the economy itself.
The closure of ITT Tech should be a warning to other educational institutions looking to make a dime at the expense of students.
Not long ago, public colleges were debt free and that public investment paid great public returns. Tuition and student debt have tripled over the last generation, and racism has a lot to do with it.
On November 12, thousands of college students in nearly 100 cities are walking out of class to demand tuition-free public college, a cancellation of all student debt, and a $15/hour minimum wage for campus workers across the US. The protest has been dubbed the “Million Student March.”
College is becoming a gamble. For a certain subset of prospective college students, the risk can seem especially daunting.
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