Writing for Huffington Post, Anya Kamenetz compares the huge level of student loan debt to the housing bubble. I'm glad to see understanding that we have oversold college spreading, but Kamenetz misses the role of the government in the college bubble, just as leftist writers turned a blind eye to the role of the government in the housing bubble. There would have been no housing bubble if it hadn't been for federal policy pushing home-ownership as if it were a good investment for everyone and making unrealistically cheap loans available. Similarly, government officials, starting with Barack Obama, keep telling young Americans that they need to go to college (otherwise, they're letting not just themselves but the nation down, says BHO) and enabling even the most academically weak, disengaged students to get into college with financial assistance from Uncle Sam. Kamenetz makes it sound as though the bad actors are all in the for-profit sector: "Someone with experience in the for-profit college marketing business told me that the same online sales geniuses who used to work for mortgage brokers are now employed by for-profit colleges. Their business is the same: fill out the forms, get the money, consequences be damned. Will we stop them this time?" Ah, but you'll find lots of kids drowning in their student loan debts who went to public colleges and universities as well. Those schools are just as eager to lure in warm bodies to fill the dorms and school coffers, just as eager to keep them enrolled even if they are learning little, and just as eager to slap educational credentials on them and send them into a job world that many will find as hospitable as Antarctica. The trouble is not the profit motive; non-profit institutions are no less hungry for revenue than proprietary ones. The trouble is that government policy makes it easy for people to misjudge the ratio between costs and benefits, leading to a profusion of decisions that borrowers later regret. Letting students escape from their debts in bankruptcy, which Kamenetz favors, only deals with the symptoms. I say we should attack the underlying pathology.
- August 12, 2010