A student who goes to college to earn a degree is future-oriented. But a student who uses extensive debt to finance this project is unbelievably present-oriented. He has not counted the cost of years of debt in the early stage of his career. Instead of building capital in his early years, and letting it compound, he gets in debt, and winds up paying bankers for the privilege. There’s no way to describe this except present-oriented. I follow Edward Banfield, who 45 years ago described such an attitude as lower class. It may seem upper-class, but it isn’t. It has not factored in the long-term cost of student debt.
There are endless horror stories about naïve students whose parents did not warn them not to take out any debt to go to college, and they loaded up massively on debt. The average amount of debt is about $26,000 these days, but the median may not be this high. I don’t know. I never see a report on the median figure.
I do know that we keep hearing stories about people who borrow over $100,000 to try to get a college degree in the liberal arts, which gets them a college degree that is not worth enough in the job market to earn a salary high enough to repay the loan and also get married. The same people who did this could have gotten the college degree in about two years for about $13,000. Nobody tells them. The parents don’t know any better. The students don’t know any better. Nobody ever sits down to warn them about the devastating effects of this much debt early in their lives.
What we don’t read about is the student who borrows $90,000, and then drops out in the senior year.
You cannot keep people from doing foolish things. I realize that this is a pessimistic way of looking at things, but it is reality. There is nothing that the state can do or anybody else can do to lighten the load. If anything, the state increases the load. It promotes the idea of borrowing to go to college. The result is close to $1 trillion of student debt, most of which is not going to be repaid. Nobody says this, but that is reality.
The federal government is going to wind up with an empty bag. It will owe the money to the banks, and the banks are going to demand payment. Sooner or later, the federal government will step in and pay off the banks. The government never lets the big banks go under. The big banks have cooperated with the government in promoting rotten loans with high interest rates, from which there is no legal way to escape. The government closed the door on escaping by means of bankruptcy. It is a program that has been designed by the bankers, funded with the promise of federal bailouts by the politicians, and the bankruptcy law was changed to make certain that these pathetic students cannot escape.
(For the solution, click the link.)