The student debt crisis
Devos sounds the alarm on big problem
SOMETIMES the most controversial thing you can do is acknowledge the blindingly obvious that no one wants to admit. That’s what Education Secretary Betsy Devos did last week when talking about student debt. She called the issue a “crisis in higher education.” Critics from left-leaning groups such as the Center for American Progress accused her of fearmongering, but the numbers back Ms. Devos.
More than 44 million people now owe $1.5 trillion in student debt. That is the second highest type of consumer debt, trailing only home mortgages. Ms. Devos pointed out that student debt has tripled since 2007. In comparison, the nation’s aggregate credit card debt was $1 trillion in 2008. After falling during the 2008 downturn, it’s back to $1 trillion.
Two factors contributed to the increase when it comes to student debt — more people taking out student loans and individuals borrowing more. Ms. Devos attributes 70 percent of the increase to more borrowing by students.
The average debt load for students in the class of 2017 has climbed to almost $40,000, a staggering amount.
There is some good news for Nevada. The state’s median student debt is $14,218, the third lowest in the nation. Unfortunately, 15 percent of student loan debtors in Nevada have defaulted. In Utah, where median student debt is just $500 less, the default rate is 7 percent. That’s especially concerning, because borrowers can’t get rid of this debt through bankruptcy, as they can with home loan or credit card debt.
Like most big problems, this one has multiple causes. Start with the decision by the Obama administration to essentially initiate a federal takeover of the student loan industry. This gave students easier access to money to pay for college, regardless of their credit-worthiness or ability to pay it back. What happened next was entirely predictable: Colleges kept raising prices.
Another problem is too many high school graduates are not academically ready for college and would be better off attending trade schools or directly entering the job market. It’s the worst of both worlds for a student to go to college, take on massive debt and then drop out. Unfortunately, that happens frequently in Nevada. UNLV’S four-year graduation rate is 13 percent. This suggests many of Nevada’s college students aren’t prepared for college — which is borne out by the state’s dismal ACT scores and remediation rates.
Many students leave college burdened by debt that seems overwhelming, rather than empowered by a degree. That debt can linger for decades and delay homebuying, marriage and having children.
That’s a major problem. Ms. Devos deserves credit for standing up to the higher education establishment and pointing out the obvious.
The views expressed above are those of the Las Vegas Review-journal. All other opinions expressed on the Opinion and Commentary pages are those of the individual artist or author indicated.