Turn Them Over to the Torturers

The road to hell is paved with good intentions and today the paving stones are often student loans. What a royal mess! We've produced millions of young people with debts they can't hope to pay, degrees and training certificates that aren't worth the paper they are printed on, no prospect of a decent job, and little hope things will ever change. As always it is the poor and vulnerable who suffer most.

It was a noble idea. Offer low interest guaranteed loans to young people who might not otherwise be able to afford college. They will graduate to good paying jobs, repay the loans, and become productive taxpayers. What's not to like? But of course there were reasons those loans were unavailable from traditional private lenders. The students typically had no collateral. The loans were high risk. Not to worry, the government will mitigate the risk by making the debt not dischargeable in bankruptcy. More, the government has collection tools not available to private lenders. They can confiscate tax refunds and even garnish welfare checks. What risk?

It worked for a while. Nobody seemed to notice that tuition was going up faster than inflation. There was always another loan to cover it. Educators began to offer more and more programs in ethnic and gender studies. Who could put a price on high ideals? Lobbyists got eligibility broadened to cover training in everything from computer programming to hair styling. Students were often not sophisticated enough to ask whether there might be a real job waiting.

So here we are. We've got people with six figure debts qualified at best for low five digit jobs. They will carry the debts to their graves, chased all the way by the hounds from collection agency hell.

This has got to stop. I'm not sure what the solution is but it is in nobody's best interest to have so many young people deferring major life decisions like marrying and buying a home, maybe permanently. We have bankruptcy laws for a reason. If you can't pay, you can't pay. The lender has to have some risk too.

I don't like the notion of bureaucrats managing college curricula but if taxpayers are going to pay for it shouldn't somebody see that we get value for our money? And aren't most college administrators government bureaucrats anyway?

We could start with a better job of counseling. A student who starts taking out loans should at least have a clear where they are leading. Is there any reason college and student couldn't enter into a contractual relationship for a degree program based on a reasonable plan? One with consequences for both it the plan goes off track? What will the total debt be at graduation? What will the payment be and what is a reasonable expectation for disposable income? Could such a plan be evaluated by a disinterested third party?

After WWII we built what remains the world's finest university system. We financed it largely with the GI Bill. Returning service men took the money they were eligible for and spent it at pretty much the school of their choice, and by and large they spent it wisely. But these were adults and they didn't have to repay the money. Most of today's students haven't had those life experiences and they do have to pay. But why couldn't we take a new look at the GI Bill, see what made it work so well and how it might be tweaked to work with today's student loan program?

In the meantime we've got to do something about all these young people with debts they can't pay. We can't just throw them all into debtors prison.