I grew up in Waterbury – no silver spoon in my mouth. My parents were both teachers. I went to public high school at Crosby High. We had a nice middle-class life. We took a vacation every year. We went out to eat occasionally. Life was good and comfortable. We weren’t wealthy, but I never felt like I was missing out on anything.
When it came time to continue my education beyond high school, I knew that I was going to be able to go to college and law school if I wanted to. My parents saved their money, I worked from the moment I turned sixteen, I studied really hard and got scholarships, and, ultimately, we came up with the money. It took a few loans to bridge the final gap, but as an investment, taking on the small amount of debt made sense.
Back then college cost around $20,000 a year, and law school was a bargain at eight grand a year. What a deal. When I got my first job I remember paying a few hundred bucks a month on my loans. But the educational investment paid off, and I could carry that debt.
All of that was 35 years ago though. Today, college costs have skyrocketed. My last child is in college now, and costs approach eighty thousand a year when all is said and done. A four-year investment in a college education for one child costs the same as a nice suburban home. For three kids, you could get the house and the beach house.
Which is to say that college costs are out of control. And the guys with stink on their collars in the equation are the colleges that have made education unaffordable for most, along with their complicit partners – the banks and the government – who have helped finance the outrageous tuition and room and board costs with limited risk.
While it is generally understood that student loan debt is not dischargeable in bankruptcy – meaning you cannot walk away from a student loan by filing bankruptcy – the Consumer Financial Protection Bureau says that some student loans can be discharged in bankruptcy, albeit with greater difficulty than other consumer debt.
Still, when President Biden announced last week that student loan debtors would be able to gain forgiveness for up to twenty thousand dollars in loans, I shook my head. Because it does not solve the problem
Loan forgiveness is a band-aid on a problem that remains out of control. Credit remains too easy to obtain for folks who should not be getting loans in the high five to six figures to finance an education that will likely lead to a paycheck in the mid five figures over the long term. Risk management and credit counseling seems like it has never been part of the mix when free credit was being handed out to folks who would never be able to repay it.
And while all of this was going on, neither the colleges nor the lenders were assuming any risk because the rules set it up so that few if any of the loans would be dischargeable in bankruptcy.
As usual, the risk is borne by taxpayers and the debtors are vilified as the bogeymen, when in fact the big-money guys created the problem but haven’t been asked to deal with it.
I don’t like loan forgiveness programs. In America we are expected to deal with the consequences of our actions. If college is to become affordable, the rules of the game need to stop favoring big money.
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