Today’s lead editorial in the New York Times is entitled “Full Disclosure for Student Borrowers.”
Basically, the Times says that “[c]olleges,
lenders and Congress must ensure that students understand their debt burden.”
Pardon me, Mr. and Ms. New
York Times editorial writers, but that advice is not very useful. It is
true that a lot of student-loan borrowers did not understand the nature of
their loan obligations. Some did not realize they had borrowed from private
lenders instead of the federal student loan program, for example; and a great
many made poor decisions with regard to what they chose to study. People who
borrowed a $100,000 or more to pursue degrees in religious studies, sociology,
or some other non-remunerative field did not make smart decisions.
But the fact that many students took out college loans
without understanding the consequences is only part of the problem. A bigger
part of the program is this: The student loan program has spawned a rapacious
for-profit college industry, which Congress refuses to regulate. As a whole,
this industry has very high student-loan default rates; and many of them are
much more expensive than public-college alternatives. Today, the for-profit
institutions enroll about 10 percent of all the post-secondary loan borrowers
but they receive about 25 percent of the Federal student aid money.
Another problem is the private student-loan market, which
generally charges students higher interest rates than the federal student-loan
program and offers students fewer protections like economic hardship
deferments. Congress passed legislation that makes it almost impossible for
students to discharge their private student loans in bankruptcy, which is an
outrage.
If the New York Times
wishes to offer useful advice about solving the trillion-dollar student-loan
mess, it needs to endorse the following actions:
More accurate reporting of student-loan default rates by the
U.S. Department of Education, particularly the default rate for students
enrolled in for-profit schools,
Repeal of the statutes making it nearly impossible for insolvent
students to discharge their student loans in bankruptcy,
Passage of effective consumer-protection laws that will
protect students from unscrupulous college recruiters and colleges’ misleading representations
about job prospects for graduates of post-secondary programs,
Congressional or executive action to stop the federal
government and the student-loan guarantee agencies from garnishing elderly
defaulters’ Social Security checks.
Perhaps the New York
Times has offered more useful information about the student-loan crisis in
the past. But the advice offered on
today’s editorial page does not go nearly far enough toward solving a problem
that is causing hardship and suffering for millions of people.
References
Editorial (2012, May 23). Full disclosure for student
borrowers. New York Times, p. A20.