When it comes to student loans, do we need more individual responsibility or more compassion? Probably both.
We’ve celebrated college degrees in the United States to the point that young people see it as the only pathway to a prosperous career. So it’s no wonder why they have been willing to borrow ever larger sums each year to cover the rapidly ballooning costs of tuition and housing.
For the most part, the borrowing has been worth it. On average, going to college leads to higher earnings that more than offset the cost, even accounting for the additional expense of using debt to finance enrollment.
The New York Federal Reserve estimates that the rate of return on an associate’s or bachelor’s degree is approximately 15 percent — that’s about double the typical return in the stock market.
But those statistics aren’t any consolation to the 1 million new borrowers who default on their student loans each year, often because they didn’t complete their degrees. These individuals are perhaps the worst off: They have taken on debt, but they don’t have the earning power to pay it back.
So what are we to do about it? Some, including most of the Democratic presidential candidates, think we should simply wipe it away — perhaps the ultimate act of compassion for borrowers.
Continue reading the entire piece here at the New York Post
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Beth Akers is a senior fellow at the Manhattan Institute and coauthor of "Game of Loans: The Rhetoric and Reality of Student Debt." Follow her on Twitter here.
This piece originally appeared in New York Post