Poor Getting Hosed in Student Loan Bubble
new graphic in Bloomberg Businessweek revealed that more than half of all student debt is held by households with a net worth lower than $8,500. The average loan balance, by contrast, is $20,326.In case there were any doubt, this reinforces the sense that the student loan bubble is inflating the same way as another that led to financial meltdown not so long ago. In the case of housing loans, misguided social activists and policymakers tried (and are trying still) to steer low-income people into home ownership. In the case of student loans, they’re pushing them into colleges. But in both cases, low-income families are encouraged to take on debt that they won’t be able to manage, and in both cases the intended beneficiaries get hosed.This pattern suggests that we should be more wary about for-profit education in particular. While we believe that for-profit schools have a vital role to play in making American education more flexible and user-friendly when properly overseen and regulated, there are definitely a number of fly-by-night programs out there that specialize in fleecing the poor and the unprepared.[Ball and chain image courtesy of Shutterstock]
Newer Post Students Shippin' Out to Boston Older Post How Serious are Beijing's Efforts to Root Out Corruption?