Here’s Why the Government Caused the Student Loan Crisis
Easy lending rules and failing government policies have created a student loan bubble, pushing the price of a college education out of reach for most American families. At least, that’s the opinion of famed market analyst Peter Schiff.
Today, the average college student graduates with over $35,000 in debt. (Source: Class of 2015 has the most student debt in U.S. history, MarketWatch.com, May 9, 2015.) More than half of young Americans view student loan debt as a major problem. (Source: Student Debt Viewed as Major Problem, Harvard University, Last Accessed September 23, 2015.)
Should the U.S. Government Address This Issue?
No, says Schiff. In an interview with senior Mises Institute fellow Tom Woods, the widely-regarded resource investor argues government policies have actually created a student loan bubble. Their efforts to make education more affordable have in fact made it more expense. (Source: Peter Schiff on His Forecasts, Past and Present, Tom Woods TV, September 3, 2015.)
Here’s Schiff’s explanation. It has been lightly edited for more clarity.
While the government’s intentions may be good, the actual consequences of these policies are disastrous. Graduates are saddled with exorbitant debts. Their degrees often provide little help in the job market.
Who will pay the bills for all of these basket weaving and French literature degrees? Taxpayers. The Congressional Budget Office now estimates the federal student loan program will cost the government $27.0 billion over the next ten years—a 30% increase from last year. (Source: Updated Budget Projections: 2015 to 2025, Congressional Budget Office, March 9, 2015.)
You can watch Peter Schiff’s entire conversation with Tom Woods here. His commentary on the student loan crisis begins at 22:05.