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Student Loans: An Often Disastrous Investment

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Student loan debt has quadrupled since 2000 and stands at a staggering $1.2 trillion today—a situation comparable to the housing crisis that wrecked the economy nearly 10 years ago. Already, 7 million student-borrowers are in default—with millions more likely to follow suit. Most of these troubled loans involve young people who started college but never finished.

A full half of students who enroll at four-year public universities fail to graduate within six years, yet they are saddled with debt averaging at least $15,000. The worst part: all this borrowing provides no benefit since college dropouts show earning power no better than those who never attended college. Runaway spending on student loans pushes too many young people toward university who don’t belong there.

Admitting schools and federal loan officials should evaluate students based on their likelihood of graduating on time. Otherwise, Washington’s policies will continue encouraging students to make misguided educational investments that never pay off.

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