Rising college loan default rates

roethlisburger
Wed, 29 Aug 2018 03:53:16 +0000

@ucbalumnus
However, most lenders have limited upside (the high interest rate that they can collect if the loan does not default). The government’s upside to offering student loans that help a person attend college instead of not attending college is a lifetime of the person’s increased earnings which improves the economy and pays greater taxes. The same is the reasoning why states have subsidized public universities and community colleges, and the national government offers Pell grants.

There’s a fallacy of composition here. The US has a lot of credential inflation. Jobs that in the past would have gone to a HS grad now go to a BS/BA holder. Jobs that used to go BS/BA holders now go to people with graduate or professional degrees. While an individual is undoubtedly better off with a college degree, the aggregate effect on gdp and the tax base, is extremely debatable.