Many people agree that there is far too much student loan debt plaguing current and former college students. Across the 44 million borrowers with student loan debt, there is more than $1.3 trillion in unpaid financial aid. On average, those individuals are saddled with a staggering $29,000 in debt.
What many people disagree with, however, is how this crisis came to be so prominent and what steps we can take to remedy the growing bubble of Higher Education. This crisis is a result of a culture that diffuses, deflects, and deliberately avoids personal responsibility— a culture that is principally fostered by means of an education system that perpetuates impractical societal norms.
To begin, the student loan crisis has accelerated exponentially as the government continues to offer money they don’t have to students who don’t deserve it or who shouldn’t be attending college in the first place. Tuition rates have skyrocketed beyond the rate of inflation as colleges and universities hike up prices as a result of the high rate of delinquency on federal student loans. While credit card, mortgage, and home equity delinquency rates have rapidly decreased, the rate for student loans has remained consistently at or near ten percent— now more than double all other aforementioned delinquency rates. In fact, only 54% of borrowers are actively repaying their student loans.
This crisis is a consequence of the millennial mindset of satisfaction over utility and combined with an absence of foresight. High school students are being propagandized into believing that college is the new high school and that one must attend an institute of higher learning following their secondary school education, even if that means burdening themselves with massive financial aid payments to do so. This is not to say that one ought to sacrifice ambition for complacency, but to consider rationality and self-awareness instead.
In far too many schools, the teaching of the potential benefits of technical schools are ridiculed and disregarded. These schools opt for encouraging their students to achieve Higher Education with disregard for the consequences, financial or otherwise. This creates a culture that effectively coerces students into making poor decisions, leaving the taxpayers to bear the financial burden of students who simply don’t belong in college and universities facing tuition hikes as a result of the amassed risk of some students unwisely being herded through their doors.
While the Federal Government is effectively beholden to no one when it comes to its fiscally infinite wisdom, private banks are in the business of making profits and must be held accountable for their investments, especially the poor ones. The best way to ensure they don’t lose money is by selectively choosing where to put their relatively limited sums of money. This is why most private loans include credit history checks and, often times, a cosigner. Because of this, private loans are given on the basis of reliance and the ability to pay back, not merely existence or a subjective sense of necessity.
These private loans will inevitably have a part to play in remedying the massive bubble of Higher Education. They have lower rates of deferment and delinquency and account for a far smaller piece (eight percent) of the outstanding student debt pie than federal loans. With that being said, in order to have the ability to repay loans, one must make themselves marketable. Private loans are given in consonance with ability and potential. This is why banks are more likely to incur $100,000 of debt for an intelligent student in Harvard Law than $60,000 for a junior student who is undecided on a major; there’s simply an imbalance of risk and return.
The government has no business dealing in student loans, as they have nobody to hold accountable when students are unable to pay the loans plus interest. Federal student loans encourage diffusion of responsibility, both for the student and the government. Private loans breed accountability and offer a more realistic, effective solution to the Higher Education bubble.
In order to have any marked impact on this crisis, there must be a culture shift. High schools must legitimately support the benefits of trade schools, technical programs, and apprenticeships as opposed to suggesting four-year institutions for students who are ill-prepared for the environment associated with rigorous Higher Education. In addition, financial aid given solely on the basis of subjective necessity as opposed to objective merit must cease in favor of a system that awards the highest performers in conjunction with financial sufficiency.
It’s time to realize that the state of affairs becomes exponentially more complicated and worse overall when the government dabbles in the business of free markets and private enterprise. If we fail to recognize the faults that have led to the student loan crisis, we are destined to saddle ourselves and generations after us with compounded issues of insurmountable debt, economic hardships, and regressive education systems.
The views expressed in this article are the opinion of the author and do not necessarily reflect those of Lone Conservative staff.