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Student Debt in America Hits New Record

Student Debt in America Hits New Record

“The problem could be even worse than the New York Fed’s data suggest.”

The Trump administration would be wise to start dealing with this sooner than later.

Bloomberg reports:

Student Debt in America Has Hit a New Record

Total U.S. student debt hit a record $1.31 trillion last year, the 18th consecutive year Americans’ education debt rose, according to the Federal Reserve Bank of New York.

Outstanding loans taken out for higher education have doubled since 2009, data show. No other form of household debt has increased by as much since then. In fact, of the six major categories of consumer debt tracked by the New York Fed, only student loans and auto debt have increased since year-end 2008 (total auto loans are up 46 percent). Total household debt has fallen by 1 percent.

Close to one-quarter of student debtors whose bills have come due are either in default or at least 90 days late on their required monthly payments, New York Fed data suggest. Delinquencies have remained stubbornly high, despite attempts by the former Obama administration to make loan payments more affordable. The federal government owns or guarantees more than 90 percent of all student debt.

The rise in student debt worries federal regulators responsible for policing financial markets. During the Obama administration, authorities cited student debt as a risk that could slow U.S. economic growth. President Donald Trump decried student indebtedness on the campaign trail, likening it to an “anchor” that prevents Americans from advancing.

The problem could be even worse than the New York Fed’s data suggest. The report is based on a sample of household credit reports, which regulators have found are often filled with errors. The Federal Reserve Board in Washington has total student debt pegged higher, at $1.41 trillion.


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Over the 40 years I’ve worked in higher education, an undergraduate education has gotten much more expensive in constant dollars. When I began as an Assistant Professor, many of my students worked their way through college with part-time jobs and summer jobs. Today, it is nearly impossible to work your way through college. The reasons for the large increases in expenses vary from one college to the next, but here are the biggest factors:
1. Administrative bloat. The administrator-to-faculty ratio in most colleges has doubled (or more) in the past 40 years.
2. Research. Research is astonishingly expensive, in areas such as released time from teaching (requiring more faculty to teach the same number of classes), plus modern, safe laboratories, plus instrumentation, expendables, and insurance. In large universities, research productivity is the major or only criterion for promotion and tenure, and many 4-year colleges are moving in that direction.
3. Athletics. In 39 states, the highest-paid public employee is a college football or basketball coach. Spending on football and basketball teams is out of control.
4. Country-club facilities. Every college wants to have the nicest stadium, the highest climbing wall, the biggest swimming pool, and the newest of everything else.

Solutions? We need more schools whose emphasis is on efficient, high-quality undergraduate education, where the faculty are evaluated on their ability to educate and inspire their students. Research should be encouraged, and adequate facilities provided, but as an enhancement to the central teaching responsibilities. The number of administrators should be kept to a minimum, and athletics should be available for student participation, not for semi-professional athletes who do little else. Residential facilities should be clean and adequate, with good food, but Spartan.