The Great Default
The American education system has its pros, but from the primary system all the way through the secondary system there are serious issues, and it seems like no one wants to address them. Student Debt is not an issue. It's not a conundrum, it's not a problem without a solution. Student Debt is what it is, debt financing for individuals seeking an education from an american university/college.
If you want to get into all the problems with our k-12 system, including a state funded system that allows for certain states and cities to fall dangerously behind the rest of the country. My mother is a high school teacher at a public high school. I've had friends teach in the teach for america system, and friends teach after studying at a private 4 year catholic institution, willing to chat.
If you want to get into the problems with our college system, I'll let everyone else talk about the crazy rise in cost, that doesn't match inflation, or the mass expansion of student services, meaning actual academic staff/faculty aren't getting paid steady with the cost of college either. We can debate those merits sure.
But let's be clear, the secondary education system, coupled with the student debt industry, has created a predatory system that manipulates the have nots further into proving their worth in this country. At this point, I'll explain that I'm probably privileged when it comes to this issue. I didn't grow up wealthy, I won't say poor, but all my friends were better off than me if I'm being honest. But I was smart, got into a good catholic school in an industrial city in the midwest. I studied accounting, and got a job out of college at a big 4 accounting firm in a major us/international market. My second job almost doubled my salary, and I'm paid a lot to do 'skilled' labor that allows me fully wfh capabilities. I borrowed nearly 6 figures for the pleasure of all this, and while my payments are no issue, I also went into significant amounts of credit card debt to afford other college expenses. Something that I didn't really have the means to support until I started getting internships. But for a while I was making $9-11/hour with maxxed out credit cards and accumulating debt. My school mandated students must live on campus for 2 years. So my sophomore year, my parents couldn't afford as much as freshman year and I was forced to work full time (between 2 jobs) and make monthly payments of $800 to cover my tution. My room & board cost was over $1300/month. When I paid rent junior and senior year I was paying $475 and $500, for rather large places with good location and proximity to campus. Now room and board covers food as well, but I definitely didn't spend $300/month on groceries when living off campus. And definitely not almost $1k/month on groceries and 'student services'. Now some of you may be saying didn't have to do that, and you're 100% right. But I live in a state where there are only two public universities, meaning I only had 2 chances at in-state tuition. Neither of these institutions rank in the top 200 according to US News. So why am I only allowed to go to those schools for instate tuition??
Anyways, it's obvious universities/colleges overcharge students for everything. Living expenses, textbooks, individual credit hours, etc. etc. etc. They offer some facilities in return (I was very grateful for our on campus health clinic), but again I don't think it makes up for the amount they overcharge.
And this is where student debt becomes a problem. Because the federal government is essentially guaranteeing a certain amount of student debt financing, and paying it up front the universities are raising the cost. I guess that's opinion that I don't have data to necessarily support, but it seems to track with me, at least be coincidence. Secondly though, the private market is also seeing the opportunity of making money off young adults, and the higher the cost of college, the higher the balance, and the higher the interest revenue. Again could all be coincidence, but I think private lenders have proven time and again they actually aren't concerned with risk. So you have these schools who are saying, hell yea, we're getting tuition up front from lending institutions, and we don't have to deal with collection. Let's admit more students, raise prices, and make a shit load of money. A lot of schools are not for profit, so technically these excess funds just feed these endowments, but I'd be surprised if most institutions actually struggle with having enough funds, haven't really read that in the news. I know my school has a massive endowment.
So, like I said the system is predatory, because no one in this system is actually concerned with your education, the institution or the lender. They just want you in the door, I think some people joke that they'll let anyone pay for law school, and I think that's become true about higher education in general. So, how much debt is there, well according to US News, $1.5 trillion in total debt to about 40 million borrowers as of Jan 2020, so I'm sure there's been significant reductions in both categories with some of Biden's debt cancellation. Relative to annual spending, in 2021 the Federal Government spent $6.82 trillion. That's who we owe $1.5 trillion too, a government that spends almost 6x that every year. In total, they spent $173 billion on higher education. Which is less than 3% of total expenditures. And again, that money has already been spent!! They paid it up front, that's what some of that $173 billion is, it's new notes receivables paid out to higher education institutions. So it wouldn't be a $1.5 trillion expense this year, it would be added to the cumulative debt, which sits at $30.6 trillion. Not to mention in 2021 they added $2.8 trillion in total losses to that amount. So again, $1.5 trillion, which is already in the debt figure technically as annual losses, is about 1/2 of one year's total loss, 1/5 of total annual spending. And it represents debts accumulated by over 40 million Americans for the last 50+ years.
If we don't pay our debt it won't affect the US economy. The money was already spent, and the federal government hasn't been receiving payments for almost 2 years anyway. The amount repaid each year prior to 2020 must not have been significant because it isn't listed or mentioned categorically the same way higher education expenses are in cbo annual review. So they're losing small amounts of revenue when they've been spending and adding trillions to the national debt annually for the past 4 Presidents, and hundreds of billions annually for the past 6. They can live without my monthly payment. In contrast, many many borrowers will get squeezed by these payments coming due. Many won't qualify for the various programs, and will be on the hook.
President Biden said he would get rid of partial amounts of debt, I believe he's specifically stated $10k, multiple high ranking senators think $50k is appropriate. In short, many of our public officials agree that these debts are unreasonable for us to bear, and I think they would appreciate us taking this into our own hands. That is all, I'm sure my facts could be off, my financial data came from the CBO and usaspending.gov. Everything else is off the cuff.