Boots & Sabers

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2028, 08 Oct 23

Student loan repayments restart

Here is my full column that ran in the Washington County Daily News last week:

With October upon us, the well-meaning, morally repugnant, and oft-extended moratorium on student loan repayments has finally come to an end. It is not a crisis. It is a return to normalcy.


According to Forbes, borrowers owe $1.75 trillion in student debt, including federal and private loans, or about $28,950 per student. Interestingly, the average debt for just federal loans is $35,210 per borrower, indicating that federal loans are granted much more liberally than private loans. In Wisconsin, the average borrower owes $30,778 in federal student loans.


That is a lot of money by any measurement. The problem is exacerbated by the fact that many of the people who owe tens of thousands of dollars for their education are not earning enough money to comfortably pay it back. It is difficult for a person earning $36,754 per year (the average per-capita income in Wisconsin in 2021 according to the U.S. Census Bureau) to fit student loan payments into their monthly budget — especially in Biden’s inflationary economy.


Student loans have been around for generations, but the issue has become acute in recent decades because of two aggravating factors. First, the cost of a college education has skyrocketed. Between 1992 and 2022, the inflation-adjusted average cost of college at a four-year public university increased by 26.7% according to College Board. A $50,000 education in 1992 now costs $129,000. Over the same period, inflation-adjusted median household income rose by only 17.6%. The price of higher education has been increasing much faster than students’ ability to pay.


The reasons for those increases are myriad. The federalization of student loans made for easy money for universities to tap. They took advantage of students flush with borrowed cash to bloat up their administrations and go on a building binge.


Meanwhile, the second aggravating factor is that demand has risen as high schools across America portray a college education as the only viable path to stave off poverty. Instead of portraying the military, the trades, entrepreneurship, or other career paths as equally viable, too many high school teachers and counselors — all college graduates themselves — have culturalized kids to think that anyone without a college degree is lesser.


Compounding the misleading culturalization, the abysmally wretched financial education provided in those high schools leave prospective students ill-equipped to evaluate the risk/reward of financing a college degree with debt. Ignorant of the power of compounding interest, too many kids are borrowing tens of thousands of dollars to get a degree with little market value. The result is that they are unable to get jobs after graduation that pay enough to easily pay off the debt.


It is true that some people are not getting the value out of their degrees that they had hoped for or were promised. It is true that college costs more than it should. It is true that student loan payments make it more difficult to afford other things and that everything is more expensive than it used to be. It is true that lenders were all too eager to dole out money without any consideration of the degree being pursued or potential future earnings of the graduate.


All of these things are true, but it does not absolve the borrowers from the obligation to pay off their own debt. It is not a financial question. It is a moral one. If you borrowed the money, then you must pay it back. To fail to do so makes you a shameful deadbeat and a drain on your family and community. Having a college degree does not make you any less of a loser if you renege on your obligations.


Furthermore, nobody wants to hear you whine about your student loans. In 2022, less than 38% of adults 25 and older had at least a bachelor’s degree. Three in five adults in the United States do not have a college degree and did not sign up to pay off the debt of people who have one. Most adults who do have a college degree have either paid off their student loans, are paying off their own student loans, or never took out a loan in the first place. They did not sign up to subsidize deadbeats who do not want to pay off their student loans.


The college and student loan system is terribly broken and has led far too many people into borrowing more money than they can easily afford to buy degrees of marginal value. Honor, respect, and dignity demand that the borrowers pay it back as promised.


2028, 08 October 2023


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