New Student Loan Data Shows Government Can’t Stop College Collapse

A college collapse is inevitable and the federal government might delay it but it can’t stop it from happening.

Not all schools are the same and not all professors are the same. Some people just want to go college to party and get a degree as a minimal requirement for their entry into the job market. Others want to follow a rigorous path of study in order to be able to become and sell themselves as some of the best in their chosen field.

So you can’t classify all education as the same. Quality varies.

With that in mind, consider this news item from the Washington Free Beacon: “Federal Student Loan Debt Exceeds $1T; $103 Billion in Default.”

Federal student loan debt now exceeds $1 trillion, and $103 billion of that is in default, according to a Government Accountability Office (GAO) report.

“As of September 2014, about one in seven student loan borrowers (14 percent) had defaulted on their loans within 3 years of beginning repayment, and approximately $103 billion of more than $1 trillion in student loan debt was in default according to data from Education,” states the report.

So here is the issue. The more the government helps make student loans available, the more the price of tuition and other college expenses go up. The more the price goes up, the more students have to borrow. As borrowing goes up, so does the number of people defaulting. As these defaults become more numerous, potential students will become averse to taking on loans. Furthermore, the lending institutions will themselves have second thoughts.

This is true despite the fact that the loans are underwritten by the Federal government, or even if they come from the federal government directly. Even though the loans are “guaranteed” they are still made on the expectation that they will be paid back. As more of those loans are not paid back, Congress will not want to keep paying more money for student education. Slogans about “college for free” are not going to be enough. Why should hard-working, working-class families have to watch their taxes go up to support other people’s children getting a head start on a much more rewarding career? We may get some basic community college for free, but much of the college and University system does not allow itself to become a welfare entitlement.

So sooner or later, the student loan system is going to start breaking down. And when that happens, we will suddenly see fewer college students. That will spell financial disaster for the college and university system which are accustomed to raising their prices every year and expect to do so in the future.

The education bubble is going to self-destruct and no one can stop the college collapse.