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The abusive lenders are the universities, which have responded to blanket federal subsidies for an inelastic good by jacking up tuition rates while socializing the risk of default. The higher ed institutions are the bad guys here.
I am 100% for imposing wage and price controls on tuition and fees for institutes of higher learning. If they don’t like that, then they can opt out of FAFSA...and NIH and NSF support.
You want the federal government to socialize and backstop your lending risk? Fine. Then the federal government gets to impose some terms on that lending, specifically how much you’re allowed to lend and how much the good costs.
And before you say “muh, free market,” higher education isn’t a free market at all. It is a) dominated by tax exempt nonprofits, b) sustained by federal largesse, c) a provider of a unique inelastic good, and d) hierarchical without correspondence between price and status.
Conservative policy responses to the student debt crisis have been inadequate because they’ve refused to deal with the reality that there are almost no truly private institutions of higher education left in America. Ubiquitous federal subsidy is just reality.
This doesn’t get fixed by breaking up the accreditation racket. If you think accreditation is limiting or insulating the marketplace from competitors, you aren’t paying attention. First, nontraditional skill academies are proliferating, both in-person and online.
Second, the social cache of a BA doesn’t depend on an obscure accrediting entity any more than the cache of a skills academy is harmed by a lack of accreditation. The market HAS already worked in this respect.
Third, the majority of students in American higher education today are already what we used to call “non-traditional”. They’re not doing the four year post-secondary terrestrial campus thing. Why? Precisely because the BA still leads to increased lifetime earnings.
I saw this as far back as my own undergraduate career, which started in 2003. Only about 17% of my freshman class graduated in eight semesters. 20% flunked out the first year. The need to work full time to meet state school tuition debt had a lot to do with that.
And @KUnews was, comparatively speaking, one of the good guys! We instituted guaranteed tuition and had democratic control over fees. Plus, KS had a nation-leading community college system to provide remedial education support. Still, massive debt problems existed.
Anyway, I didn’t mean to go on a rant this morning. But if you want to fix student debt, make federal support a conditional opt-in, fix a price, peg it to inflation, and move on. If some effete institutions fail, so be it. We’ll be fine without so many Bennington Colleges.
