The Student Loan Crisis Is Really A College Cost Crisis

  • Student loans are an increasing burden on American graduates, but the loan crisis is really just the symptom of skyrocketing college costs. Bringing down the cost of college, which has risen far above inflation for decades due to government-subsidized student loans, should be the focus of policymakers.
  • Student loan forgiveness is a temporary Band-Aid that ultimately increases upward pressure on tuition and makes the sitution worse for the next generation of borrowers.
  • College cost has been inflating at an incredible rate—nearly twice as badley as other expensive services like healthcare. This is because the federal government now acts as a banker, offering a blank loan check to any high school graduate regardless of academic preparedness.

Student Loan Forgiveness Is An Unfair Gift To The Wealthy

  • Loan forgiveness is primarily a payoff to the wealthy at the expense of those of fewer means. The top quintile of earners hold $3 of student loan debt compared to every $1 held by students from families at the opposite end of the economic spectrum.
  • Federal interference in the student loan market was meant to increase opportunities for low-income Americans, but has had the opposite effect. Students with families in the lower half of the economic spectrum make up a smaller percentage on campus than they did in the 1970s.
  • Government backing of student loans has created a “credentialing treadmill” that puts those with a high school diploma at an increasing disadvantage.
  • Student loan forgiveness is deeply unfair to those who have spent years living frugally in order to pay off high student debt. Forgiving debt on the back end sends people the message that playing by the rules makes you a sucker.

The Real Winners Of Student Loan Forgiveness Are Predatory Universities

  • Universities get paid upfront, leaving students with high debt burdens and taxpayers stuck with the bill. This system encourages predatory behavior, like accepting students who are unlikely to graduate.
  • Universities should have skin in the game with regard to their graduates’ success.
  • We should draw down government backing for student loans, and allow private lenders who will actually look at the value of a degree restore accountability.

Read the policy focus here: Loan Forgiveness: Costly, Unfair, And Regressive.