Friday, September 17, 2010

College Loan Defaults Increasing

Photo of King's College Chapel, Cambridge. Tak...Image via WikipediaOver at there's an interesting article about graduates not paying their student loans. Figures from the U. S. Department of Education shows 7 percent of borrowers of federal student loans defaulted within two years of graduation, up 6.7 percent from the previous year and 5.2 percent the year before that. 
Her we have the perfect storm of easy flowing money from the government. Coupled with the recession starting and the cutback in job hiring. These two factors really hurt the newly graduating students. 
Even before the recession was on the horizon student borrowing had doubled. Education Secretary Arne Duncan voiced his concern over excessive debt and useless degrees. The article goes on to argue not about the burden, all this debt has but, who's debt is worse public or private schools. 
Here we see the bureaucrat mentality. The common sense rules of excessive debt isn't even explored. Just who to point fingers at. We have 2 problems here. First a mindset of non-restrictive borrowing. No preset guidelines depending on the degree your seeking. For example, borrowing $100,000 for a job that only pays $35,000 per year. Secondly, why is the government so deep in the student loan business? I can see some intercession by the government for it being the source of last resort for people who can't borrow anywhere else. 
Even some private sector loans are guaranteed by the government. The government has a never ending supply of money to loan out. In this day of an ever expanding government. Do we have to address every need of the citizen. Maybe it's time for Uncle Sam to but out. 

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1 comment:

  1. Isn't it great that the taxpayers are now guaranteeing these loans and will shoulder the brunt of any defaults and not the private sector anymore? The takeover of the student loan program happened in the past 6 months. Maybe we be moving in exactly the opposite direction.


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