I’m about to tell you a story.
It’s disturbing at best and downright evil at worst. Nevertheless, I won’t judge if you laugh a little at the dispassionate irony of it all.
Most importantly, I’ll keep it short, so your mosquito sized attention span won’t be challenged.
THE STORY OF COLLEGE LOANS
Chapter 1: The Dark Ages
Many years ago, college tuition was much, much cheaper. People could pay their tuition by working during the summer and keeping a part-time job during the school year.
However, some people still couldn’t afford certain schools. The perception was that the poor were getting excluded from those institutions of higher learning.
Since college was seen as the way to get out of the cycle of poverty, their exclusion was seen as a terrible injustice. “Everyone should have the opportunity to go to college,” they said.
Chapter 2: A Ray of Light
In an effort to eliminate the terrible injustice and level the playing field for people of all classes and colors, the federal student loan was born.
Now anyone could get thousands of dollars loaned to them with the only real requirement being that you get accepted to a college.
At first, it was great. Colleges had standards, so they didn’t necessarily let everyone in.
Chapter 3: Paradigm Shift
But over time, admission standards became less stringent. After all, who could resist all the bright young minds lined up with their pockets stuffed full of fresh government loan money?
And so, everyone that wanted to go to college, went to college. Some studied. Some didn’t. Some partied and put off life for a while. The “college education” became the “college experience”.
Chapter 4: The Predictable Fall
As any 15-year-old with a rudimentary understanding of economics could have predicted, the cost exploded and the quality of education went down.
Young students were saddled with enormous mounds of debt. In return, all they had to show for it was a piece of paper that was much, much less valuable than what everyone told them it would be worth.
Instead of getting ahead, they got an enormous mound of debt. It kept them from saving and investing. In some cases, it kept them from buying homes, getting married, and having children.
Worse yet, this debt couldn’t be eliminated through bankruptcy. It would travel with them until they paid it off or until they died (or until they voted in politicians that would pay for it for them). Basically, they became slaves to their debt.
Chapter 5: Full Circle
Which brings us to the ironic conclusion:
The very loans that were created to help lift people out of poverty were now leading young people down a path that would keep them poor indefinitely.
…Or is it???
Moral of the Story
Let’s give thousands of dollars in loans to any 18-year-old that wants it. Nevermind that they’ve never had a full-time job or lived on their own. Send them off to college and have them get drunk for 4+(++ in some cases) years while they postpone life and mortgage their future. WHAT COULD GO WRONG?
There IS a student loan debt crisis. I think most of us can agree on that. However, admitting that there is a problem does little to solve it.
The next question is why does this crisis exist?
In case you couldn’t figure it out by reading the story above, I am convinced the problem is caused almost entirely by the existence of federal student loans.
I will dig deeper into that topic in the next part of this three part series on student loans.