Solutions For a College Debt Trap
While a billion dollars may be federal "chump change," a trillion is a lot of money, even by government standards. Yet that is about the amount of American unpaid college debt.
It is more money than we borrow on credit cards; but, unlike credit cards or even taxes owed to the IRS, these loans, for the most part, cannot be forgiven even in a bankruptcy court.
What popular wisdom does to the young is to sell them a myth that college is for everyone and everyone ought to borrow money to attend. Why not? The government borrows about half of what it spends. So why should parents save for their children's education? Children can borrow.
America's current fiscal philosophy is to "never put off until tomorrow what you can put off on the next generation." It is a philosophy that came crashing down with home mortgages a few years ago and persists with student loans today.
In reality, many student loans are a federal fraud. We tell students that there is no success without college. They borrow money for that college based upon that falsity. Then, according to The New York Times, about 50 percent who try will fail to obtain a bachelor's degree within six years.
Now liberals want to expand student loans. They want to create more debt and call it "opportunity." The truth is that the current regimen of encouraging 18-year-olds to borrow enough money for a house and requiring them to pay off that "house" before buying an actual home is an opportunity for nothing more than a postgraduate debtor's prison. We can do better than that.
First, we must realize that only about half of high school graduates should even attempt four years of college. As such, our high schools must realize that 50 percent of their mission is vocational, not college preparatory. A high school ought to be as proud of its military and industrial job placement as it is of its college placement. Principals ought to hire teachers who can interpret wiring manuals with the same zest that they hire teachers who can interpret Shakespeare.
Additionally, community colleges must concentrate more on their vocational placement and less on their liberal arts transfers.
The federal student loan program ought to be cut back, not expanded. Loans for colleges that offer degrees not readily convertible into job placement ought to be limited or nonexistent. There should be nothing to stop a parent or grandparent from saving so that a student can become the best poet in America. But lenders ought not finance it.
It is as much the responsibility of a lender to ensure that the borrower can repay as it is the responsibility of the borrower to borrow only money he can repay. This is especially important when the borrower is still a teenager and will likely carry the debt into middle age.
Some, like Democrat Richard Durbin, say one remedy for the student loan problem is to allow for discharge in bankruptcy. Oddly enough, this might be part of the solution. Then, private lenders might reconsider before lending to students without job prospects after graduation.
Lending a confused teen $100,000 so he can write poetry and demanding he pay it back from royalties is almost absurd. It will work for someone, just as someone will win the lottery. But it makes no sense to loan money to lottery players and expect a profitable return.
Bankruptcy inclusion will cause private lenders to adjust their lending accordingly. But without curtailing government lending in a like manner, bankruptcy will only shift the burden of student loan default to the taxpayers. That may be Durbin's plan.
If America is to invest in higher education, it can no longer simply throw money at anyone with a whim to try his luck at whatever degree a college can offer. Colleges and high schools must survey job needs expected in the coming decades and organize courses for students motivated to learn those skills.
Opportunities for students choosing degrees in other fields should be open, but only to the extent that the students or their parents are able and willing to pay "up front."
Robert M. Levy is chairman of the Moore County Republican Party. Contact him at Law52@prodigy.net.
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