Tom Purcell: The Basics of Student Debt
It’s the season of giving – or, for some lawmakers, the right time to demand that the government force taxpayers to give a big gift to others.
A few weeks ago, Representative Alexandria Ocasio-Cortez went upstairs to the house to issue another advocacy for the federal government to write off nearly $ 1.7 trillion in student loan debt.
That is to say, it demands that taxpayers who did not go to university, or who did not take out large loans to go to university, repay the often massive loans of those who did.
AOC argues that the student loan system is ridiculous because at age 32, she still owes $ 17,000.
But then, unwittingly, she puts her finger on the crux of the student debt problem: “These are teenagers who commit to what often represents hundreds of thousands of dollars in debt …”, she said. “We are giving 17 year olds the opportunity to register and take on debt worth $ 100,000, and we believe that is a responsible policy.”
Of course, this is not a responsible policy.
Of course, borrowing 100,000 smackers before you are even of voting age is not a good decision.
Of course, this is a problem long created and activated by lax federal student loan policies.
A 2015 study by the National Bureau of Economic Research found that the increase in the availability of student loans has correlated with almost all increases in tuition fees since 1987.
It’s not complicated: the more you allow young people to borrow, the more colleges increase their costs, because colleges know that borrowers will borrow more.
To compete for students – and to “justify” their ever-higher tuition fees – colleges have spent massive amounts over the past 20 years, borrowing billions to build five-star dorms and other lavish amenities.
A massive increase in the number of non-university administrators has also skyrocketed the cost of running a college, according to the Huffington Post.
How to finance all these doping costs? Increase tuition fees.
A report from myelearningworld.com finds that over the past 50 years, college tuition fees have increased five times the rate of inflation.
If tuition fees had kept pace with inflation, today’s students in private and public universities would pay $ 10,000 or $ 20,000 a year – half of what they are today.
The whole tuition funding program has long been a soft racket for the higher education industrial complex.
But more and more young people (and their parents) see it clearly.
Instead of borrowing tens of thousands of dollars to get a college degree, more and more high school graduates are choosing high-paying, debt-free opportunities in the trades.
And with a record number of jobs open and a shortage of volunteer candidates, more companies are hiring young people without a college degree.
This drop in demand forced colleges to suddenly start cutting their “sticker prices,” according to Forbes.
So, if more and more young people are becoming more sensitive to the idea of going into massive debt, would it be asking too much of our legislators to come to their senses as well?
Their well-meaning but ill-advised student loan policies helped create a massive $ 1.7 trillion debt bubble.
To demand that the rest of us pay off the college debts that millions of others have so willingly assumed is not only ridiculous, it is patently unfair.
Case in point: Alexandria Ocasio-Cortez earns $ 174,000 per year.
Rather than forcing taxpayers to pay off her $ 17,000 college loan, maybe she should trade in her Tesla for a used Hyundai.
Library freelance writer Tom Purcell is the author of “Misadventures of a 1970s Childhood”. Visit it on the web at TomPurcell.com.