Who’s to blame for the fact that America’s student debt level has topped $900 billion, a figure substantially higher than either total credit card debt ($693 million) or auto loan debt ($730 million)? Arthur Herman, writing in the latest Forbes magazine, points a finger toward the nation’s capital.
[F]ew realize the real culprits behind the debt explosion aren’t the students. It’s not even America’s colleges and universities, although they’ve been complicit in running up the final bill.
It’s the federal government. And like everything else where Washington distorts the value of prices or props up supply, the result has been a disaster — and has turned a generation of our best and brightest into dependents on Big Government.
In 1991 one in ten American households owed some form of student loan debt. Today it’s one in five.
It doesn’t appear that this article has been posted yet online, but Herman covers similar ground in this piece posted at Ricochet.com.
Why is everyone so happily oblivious? Then I had the answer: the federal government. Washington has steadily turned our institutions of “higher learning” (I use that term very loosely) into adjuncts of the welfare state–and a generation of college students into its debt peons.
The numbers tell the story.
Federal aid to colleges and universities tripled between 2000 and 2008 — making it one of the biggest and fastest growing discretionary spending sprees in the history of the budget.
In 2011 alone the Education Department handed out $157 billion in student loans — while Obama has grown the go-to-college-free Pell grant program from $14 billion in 2008 to about $40 billion in 2012.
No wonder college and university administrators can ignore fiscal reality. Their customers’ costs are largely underwritten by taxpayers- and they are themselves tax exempt.
For the customer and their families, of course, that freedom from reality comes with a massive burden of debt: debt they can’t escape through normal bankruptcy and which cripples their earning power in their first years out of college — assuming they can even get a job.
