The Daily Caller posted an article today that illustrates the problem with teaching children to expect things they didn’t earn.
The article reports:
Nearly half of all America’s college students have deluded themselves into believing that the federal government will graciously forgive their student loans despite the fact that the federal government forgives only a very low percentage of student loans.
LendEDU, a student loan marketplace website, documented this startling disparity between belief and reality in a nationwide survey of 500 students currently attending America’s colleges and universities, reports the New York Post.
The survey shows that 49.8 percent of the students surveyed think they will be eligible for federal student loan forgiveness.
In reality, only about 10 percent of all college graduates will ever see any portion of their student loans forgiven under current loan forgiveness law.
Under President Obama, the government took over the student loan program in 2010.
Yesterday Fox Business reported:
In an exclusive interview with FOX Business’ Liz Claman, Washington College President and former Federal Deposit Insurance Corporation (FDIC) Chair Sheila Bair said the student loan debt crisis could spark next financial crisis, since it is a “tremendous drag” on the U.S. economy.
During the financial crisis of 2008–09, excessive mortgage debt collapsed consumer spending as more families opted to pay off debt. Bair said the same dynamic could be seen if the student debt bubble bursts.
When the housing bubble burst, there were assets that could be sold (although at a loss). There will be no assets to sell if the student debt bubble bursts–a lot of the people with the debt are living in their parent’s basements.
The Daily Caller reports:
Of the $1.31 trillion in outstanding student debt, some $31 billion, is “seriously delinquent,” meaning the debtors are at least 90 days past their payment dates.
Well known economist Milton Friedman is credited with saying, “If you put the federal government in charge of the Sahara Desert, in five years there’d be a shortage of sand.” I think it’s time to get the government out of the student loan business and give that business to the banks. Banks are better judges of how to lend money and how to get paid back. I have a strong suspicion that the taxpayers may get stuck holding the bag on this one.