Conservatives really need to get serious about thrift in all aspects of life and public policy. PJ Media is reporting that the level of student loan debt nationwide is at $1.5 trillion. The source for the story is the American Association of University Women and they note that nearly two-thirds of the debt is held by women. That number surpasses credit card debt. The number of Americans holding all of this student loan debt is about 44 million.
The Wall Street Journal recently profiled an individual who holds $1 million in student loans. Yes, you read that right. For many borrowers of hefty dollar amounts, there is no way to pay down the principal given the interest rates. There is a lot of depressing news the more research you do into the student loan crisis. Around 11 percent are delinquent on their loans, and some federal borrowers are in forgiveness repayment plans. Many of them will not be paying back anything close to the amount they borrowed.
Graduate students have no limits on how much they can borrow for tuition, fees, and living expenses, thereby sinking further into debt with no realistic way to ever pay it back. Of course, all the readily available money creates a false market with expenses for higher education continuing to spiral upward. The whole system feels like a house of cards about to collapse, but there will be no bounce back like the housing bubble. It’s very possible that the bubble bursting will sort out this debt mess at some point, but by then how much damage will have been done?
Are there any examples of products or services skyrocketing like higher education costs? Healthcare is the only example I can think of, and even those trend lines are well below higher education.
Andrew Gillen over at the Martin Center has another idea to defeat the Bennett Hypothesis by “replacing the Cost of Attendance (CoA) with the Median Cost of College (MCoC).” It’s a worthy read and a good proposal to bring a more common sense approach to loans and allow for market competition to play a larger role. This is a no-brainer proposal, so it probably doesn’t have much support in Washington now.
Conservatives lawmakers and policy gurus need to do the right and moral thing and reform these unsustainable loans. It’s immoral to allow students to rack up excessive debt. The unsustainability is unfair to federal taxpayers and many lower-middle class citizens who subsidize upper-middle-class lifestyles as well.
But the deeper point is that a nation of debtors cultivates a nation of borrowers and serfs to the government. That’s one reason why so many young Americans have their hands out begging national politicians for free college or to wipe away their debt. Are these the type of citizens that will get serious about our $21 trillion federal debt?
Without action, the politics of a debtor nation only means higher taxes, more regulation, and more redistribution of wealth. Thomas Jefferson wisely noted, “It is incumbent on every generation to pay its own debt as it goes.”
We are so far from that maxim today, and until conservatives become serious again about tackling debt and spending, I’m not sure we will really see much meaningful reform at the federal level. And that starts with championing the virtue of thrift in our own lives if we want it to translate into meaningful policy at any point.