by James McGirk
After four debates and with a tsunami of political advertising inundating the United States, it is clear that neither presidential candidate is willing to act decisively on what should be the most pressing issue of our day: student loan debt.
Democrats offer crumbs. Republicans even can’t be bothered to pander to young voters. Yet no other issue so neatly encapsulates the miseries of contemporary American existence. An entire generation of smart, educated people are being crippled with debt. Without some sort of relief, upward mobility will vanish, the gap between rich and poor will yawn wider, our economy will be left in ruins, and what’s left of our once vaunted ability to innovate will die. The parasite is killing the host.
The time has come for decisive action. Student loan debt must be forgiven completely. The federal government should not be lending money to students. All it does is drive up prices and push us deeper in debt. Offer amnesty, get rid of the program, and let colleges pare down tuition until it makes sense for a family to save up or borrow money privately for their children to go. At the very least, let these loans be dischargeable in bankruptcy. This may seem like a drastic thing to do, but the situation is out of control. Something has to be done.
Student loan debt now accounts for 18 percent of American consumer debt. Unlike a mortgage there is no way to discharge a student loan (short of total medical disability). The interest is painful: 3.4 percent for a loan taken out as an undergraduate, and a usurious 6.8 percent for a graduate student. The interest capitalizes. Not only is it charged on the principal, but on any unpaid interest as well, meaning that a loan balloons while student is in school, or during the increasingly frequent forbearances necessary during periods of unemployment. There is no risk of default to the lender. The government guarantees all student loans. Nor is there any risk to universities. It is a trough of free money and these swine have gorged themselves, shamelessly raising tuition year after year, at a rate far outpacing inflation.
The class of 2011 graduated with $26,600 worth of debt each. That’s just for a bachelor’s degree. And those numbers include the lucky third that graduated with no debt at all. For a shot at a job that might offer entrée into a white-collar career you need a graduate degree and a year or two of unpaid internships. Lawyers and doctors, the traditionally secure gateways into America’s upper middle class can easily amass hundreds of thousands of dollars worth of debt. A year of unemployment could wipe them out completely. Very few people who graduate with six-figures of un-dischargable debt will take risks. Every wonder why so many math and science PhDs are taking jobs on Wall Street? Wonder no more.
