Student loans are stifling economic growth

Glenn Harlan Reynolds:
With student-loan rates set to double, President Obama has been busy posing as Mr. Fixit. Too bad it’s just a pose. 
The country has a serious student-debt problem, and also a student-loan problem. But they’re two different things. 
The student-debt problem is that too many students are borrowing too much money to finance educations that won’t earn them enough to repay the loans. This leads to misery. 
A recent Wall Street Journal story noted that many students are postponing marriage, children and home-buying because of the difficulty — in some cases, the impossibility — of keeping up student-loan payments.

This is bad for them and the economy, because they won’t be available to soak up the excess houses built during the housing bubble, which also was fueled by cheap government loans. 
If they postpone having kids, fewer taxpayers will exist to fund Social Security and other programs in a few decades. 
If these younger people had gone into debt flipping houses in 2005, they’d be able to declare bankruptcy and get a fresh start — but the law doesn’t allow that. 
Student-loan debt is treated like child support, meaning that it’s almost impossible to get out of. People who paid six-figure sums to universities that happily pocketed the money in exchange for gender-studies degrees that would never produce a job are now debt slaves, like the coal miners in Tennessee Ernie Ford’s “Sixteen Tons.”

There is more.

The real crisis is in the cost of education that is growing much faster than the rate of inflation.  Colleges and Universities need to reduce costs and lower the fees they charge.  They need to do away with programs that lead to no jobs.  Students should not be borrowing to pay for courses that will not be productive for their career.  There needs to be a cost benefit analysis done on these loans.

What has happened is that the schools and the government have collaborated to become predator lenders to vulnerable students, locking them into a life of drudgery and living on their parent's couch for the half that can't find jobs.


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