Who Got Rich Off the Student Debt Crisis

42 million people owe $1.3 trillion in student debt. It’s a profit center for Wall Street and the government. Here’s how we got into this mess.

A generation ago, Congress privatized a student loan program intended to give more Americans access to higher education.

In its place, lawmakers created another profit center for Wall Street and a system of college finance that has fed the nation’s cycle of inequality. Step by step, Congress has enacted one law after another to make student debt the worst kind of debt for Americans – and the best kind for banks and debt collectors.

Today, just about everyone involved in the student loan industry makes money off students – the banks, private investors, even the federal government.

Decades ago, the federal government relinquished direct control of the student loan program, opening its bank to corporations concerned with profits, not diplomas. Private equity companies and Wall Street banks seized on the flow of federal loan dollars by peddling loans that students sometimes could not afford and then collecting fees from the government to hound those students when they defaulted. 

Once in place, the privatized student loan industry has succeeded largely in preserving its status in Washington. Student loans are virtually the only consumer debt that cannot be discharged in bankruptcy except in the rarest of cases – one of the industry’s greatest lobbying triumphs.

DYI Comments:  The chart above is telegraphing the state of the economy as young people, along with older adults as well, frustrated with anemic job opportunities went back to school hoping that job prospects would have improved once they were finished.  Many have had poor to mixed results at best.

And as I've stated many times before the best way to lower the cost significantly is to do away with student loans.  The universities/colleges/technical schools would have to lower their costs or confront a substantial drop in student population forcing reduction in staff from janitors to professors along with unused facilities.  Within 3 to 5 years competition for students would be in full bloom as educational establishments drop tuition and other costs. At the end of 7 plus years costs would once again at the level of buying a car as compared to today that of a house.  Basic economics 101 and political will is required.  Unfortunately I've only heard a few lone voices pushing for ending student loans.

In New Jersey student loan program, even death may not bring a reprieve

Annie Waldman

Sunday, 3 Jul 2016 | 10:51 PM ETThe New York Times
Excellent article how New Jersey is feeding at the trough at the expense of our young people.
DYI