Chasing College Loan Debt



Like a dog chasing its tail, Washington’s attempts to intervene in higher education lead to experiments that expend inordinate amounts of time and taxpayers’ money, leading nowhere.

In the third installment of RealClearPolitics’ series entitled “Middle Class Pain,” Emmeline Zhao wrote last week about families’ struggles with higher education debt. She noted the effects of what Politico called Washington’s “predatory loan program,” something this blog covered last year.

Notably, Zhao explains that what was once largely considered a students’ problem is now families’ problem.

According to Pew Research, adults aged 18-34 (Millennials) are more likely to be living in their parents’ home than on their own or with a spouse. As a consequence or coincidence, parents are shouldering more of the burden for paying for college and carrying student loan debt with vehicles like the aforementioned Parents PLUS loans.

Cue the AP from last October: “America’s crushing surge of student debt… has bred a disturbing new phenomenon: School loans that span multiple generations within families.”

And how serious is the problem today? The size of total U.S. student loan debt grows by $2,726.27 every second and now tops $1.3 trillion. The cost of college has tripled in the last 40 years, and the cost of textbooks has increased 951 percent since 1978 according to the American Enterprise Institute’s Mark Perry.

List these among the reasons more Americans say the economy is still the top priority for the next president. Gun control and the environment make for catchy headlines (Washington Post, July 17: “Republicans dismiss Trump’s call for gun-control measures”; New York Times, July 16: “How Climate Change Could Make the Ground Collapse”) but just 2 percent of Gallup respondents said each of these issues, respectively, should be the next president’s top priority.

Back to the dog running in circles: To ease borrowers’ pain, Washington finds new reasons to bail them out, even consolidating loan repayment systems into one federal website. Apparently, it’s not banks’ responsibility to organize repayment or students’ responsibility to budget but Washington’s role to organize someone else’s problems and have you pay for them.

This complex mess has no simple answers, only principles on which lawmakers should base future decisions:

  • Washington should not have taxpayers pay for everyone who wants to go to college to do so.
  • When federal lawmakers ease debt originally assumed by someone else, debt grows.
  • Individuals should have more flexibility to save for any future expenses, including college, with few—if any—tax penalties.

Federal lawmakers should use these guidelines to solve the higher ed loan crisis. New borrowing methods, more reasons to bail out borrowers, and new websites don’t count as answers.

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