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Student Loans: An Often Disastrous Investment

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Student loan debt concept. Young woman with heavy box full of debt carrying it up the education ladder

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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  1. James Bonham jr  •  Jun 11, 2016 at 6:30 pm

    The article is slightly wrong headed because there was no housing crisis. There was a financial crisis caused to a large extent by millions of people defaulting on mortgages. The surge in defaults started in late 2007 as the economy was plunging into recession. Mortgage payers were forced to choose paying the bank or buying gasoline in order to drive to work because of the OPEC driven oil price shock. When OPEC tripled the price of fuel mortgage payers chose to keep their jobs instead of their houses. After millions of people stopped making mortgage payments the banks ran out of money. After the banks ran out of money the financial crisis started. The financial crisis actually struck in the middle of September 2008 nine months after the recession started.

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