TUCKER CARLSON, FOX NEWS: America’s collective student loan debt now stands at more than $1.5 trillion dollars. That’s more than the entire GDP of Spain or Sweden, or any of the 54 countries in Africa. Apart from mortgages, student loans are the biggest source of personal debt in America, more than car loans and credit card bills. That’s a staggering around of debt. It’s enough to distort and cripple the US economy. It’s enough to stunt the life prospects of an entire generation of young people. If you’re wondering why the majority of Americans under 30 say they prefer socialism, debt is a major reason. Student loans are killing them. And they never go away. Thanks to extensive lobbying efforts, student loans, unlike other forms of debt, cannot be erased by bankruptcy. Economist Lenore Hawkins came on the show recently and explained the consequences:
HAWKINS: If these guys start to default, who is going to be left holding the bag? Well, one of the really big challenges here is you can't actually get through bankruptcy. You can't remove this debt, while you can with everything else. So, what are you going to do? You're not going to pay your credit card bill, you're not going to pay your mortgage, you're not going to pay your home loan because you don't have a choice even when you go to bankruptcy to not pay your student debt.
The student loan crisis is a modern problem. Just thirteen years ago, the average new college graduate owed $20,000 in student loans. Today, that number has jumped to $37,000. Student debt is rising far faster than the earnings of American workers — the very earnings that are used to justify student loans in the first place. For professional degrees, the numbers go far higher. The average law school grad carries more than $110,000 in student loan debt. For new doctors, the burden is nearly $200,000. Overall, two million Americans owe more a hundred grand in student loans. Imagine starting life that far behind. Many of the people paying off college loan debt never even received a degree. They tried to improve their lives by attending college. They wound up poorer and in bondage. Not just a few of them. Millions and millions of them.
What are the effects of this? The damage is more profound than anything caused by climate change. Young people are broke. As a result, they’re delaying the vital life transitions that were automatic for earlier generations. In 1990, a quarter of young adults lived with their parents. Today, the number has risen to 35 percent. The home ownership rate for millennials has dropped eight points from the generation before. Unable to afford homes, millennials are getting married later and less often. They’re also having fewer kids. It’s not because they don’t want children. According to Gallup, the percentage of Americans who want children hasn’t changed in 25 years. Yet fewer children are being born. Thanks in part to rising debt levels, America’s middle class can’t replace itself. That’s why we’re told we must import millions of new workers from abroad.
Young Americans want homes and families. Helping them get those things ought to be our top priority as a country. We can’t begin until we reform the student loan system. Why haven’t we done that? A hugely powerful lobby stands in the way: colleges and universities, whose lobbyists swarm Washington. Not surprisingly, these are the people benefitting from student loan debt. Drive through rural America and you’ll see how well they’ve done. In a sea of poverty and despair, you’ll notice gated islands of affluence. These are colleges. Outside the gates, people are unemployed and dying of opioid overdoses. Inside the gates, it’s like the Ritz on south beach. If you haven’t been to an American university lately, see for yourself. Everything is new. There has been a building boom underway on campuses for decades, all funded by debt that’s destroying a generation of kids. A hundred schools have endowments of over a billion dollars. They’re hedge funds with schools attached.
What have colleges done with this money? Hired massive staffs of likeminded people, for one thing. From 1987 to 2012, the number of administrators on college campuses more than doubled. That’s far bigger than the increase of actual students going to college. College administrators routinely make six-figure salaries. What exactly do they do for a living? Not a single thing that makes this a better country. College presidents often get seven figures. Their pay is about the only thing in America rising as quickly as tuition costs.
Academic publishers are getting rich from the debt boom too. Prices of textbooks have tripled in the past 20 years. Printing hasn’t gotten more expensive. Non-academic books are cheaper now than they were two decades ago. Students are a captive market. They’re being exploited ruthlessly. Nobody says a word about it.
So to sum up: young people in this country get poorer every year. College administrators, probably the least impressive group in America, are getting richer at their expense. It’s not a law of the universe that this has to happen. It’s a product of policy, and the incentives our society has created. Right now, the federal government allows young people to take out an almost unlimited amount in student loans. Colleges have caught on. They hike their tuition to capture as much of that money as possible. Young people have little choice but to go along with it. Colleges still control access to the credentials we’re all convinced are necessary to achieve success in the modern economy. It’s a racket. They’re the gatekeepers of modern society. They’re ripping off every kid who passes through.
What’s the solution? Here’s one: have colleges co-sign the loans. Why shouldn’t they? If you and I enter into a partnership in business, and we succeed, we share the rewards. But we also share the risk. If we fail, we’re both on the hook. That’s how honest arrangements work. College loans don’t work that way. Colleges get rich no matter what happens. Kids are on their own. If students get a degree and a decent job and repay their loans, great. But if they drop out, or their degree turns out to be worthless, as so many are, and they’d can’t repay what they borrowed, so what? The college doesn’t care. They’ve got no stake in the outcome. Colleges get all of the benefit and none of the risk. That’s the definition of a scam. It’s amazing it could even be legal. It shouldn’t be.
Maybe congress could take twenty minutes from the Russia hoax and posturing about climate change and fix one of the biggest problems this country faces. Pass a law forcing colleges to share the liability on defaulted student loans. What’s the argument against it? That colleges can’t afford it? That taxpayers should shoulder all the risk, so that Wesleyan or Brown can build another diversity and inclusion center and hire more useless, overpaid deans of sensitivity studies? Kind of hard to make that case out loud. It’s too absurd. Congress should act now. The student loan system is going to collapse. That inevitable. Before it does, let’s be very clear about who's been profiting from it.