The U.S. Department of Education spent $1.4 billion in 2011 to track down students who are in default on their government-guaranteed loans. The total amount in default was $76 billion.
If this program were titled accurately, it would be called the “Blood Out of Turnips” program. There is no way that the government is going to get back this money. The amount lent keeps climbing: over $1 trillion. The amount in default keeps growing.
The recent graduates cannot find jobs that enable them to pay off these loans. The average debt is $25,000. But the non-average debts higher than $50,000 are expensive to repay. The job market for recently graduated students is the worst in three decades.
The government does not stop guaranteeing these loans for banks. It increases its guarantees. This is the banks #1 income source. The size of the market keeps growing. The Feds back the loans. The Feds pay for the collection agencies. What could be better for bankers?
This is leading to the debt-dependence of a generation of college students, whose parents put pressure on them to go to college, yet do not finance 100% of their children’s college educations.
None of this is necessary for liberal arts majors. They can earn their degrees for under $15,000 total. But their parents do not know this, and neither do the students.
To see these students building up chains for their futures is a sad thing for anyone who knows better. Their parents do not warn them. Worse, their parents encourage this.