Is Student Debt Really A Crisis? These Surprising Facts Suggest It’s Not

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The Federalist:

Making taxpayers assume student debt might score short-term political points but doesn’t address the underlying problem: why college costs so much while delivering so little.

Calls for Joe Biden to force taxpayers to pay off some or all student loan debt upon assuming the presidency have elicited strong opinions on all sides. While a broad consensus says the cost of higher education in the United States is too high, a large number of Americans deem it a great injustice to have to pay off debt others have willingly taken on.

Another large number of Americans feel their student debt has stunted their economic and financial viability, preventing them from purchasing homes and starting families. For others, there remains a stinging regret that the costs were simply not worth the benefit.

As with most hot-button topics, there’s a lot of hyperbole and overheated rhetoric about student debt. In truth, many of the relevant facts run counter to conventional wisdom surrounding the issue. For example, most Americans might be surprised to learn the college-graduate-turned-barista isn’t a thing.

The main points:

Few People Owe Six Figures in Student Debt – According to the left-leaning Brookings Institution, however, only 6 percent of borrowers owe $100,000 or more, and many who do incur these debts have pursued post-graduate degrees.

A Give-Away to the Upper-Class – “The fact that households in the upper half of the income distribution and those with graduate degrees hold a disproportionate share of that debt almost never makes it into the narrative,” says Brookings. This means so-called “debt-forgiveness” plans like the ones championed by Sens. Bernie Sanders and Elizabeth Warren will mostly benefit those in higher-income groups. One study estimates the bottom 60 percent would receive only 34 percent of the benefit in Warren’s plan, a thoroughly unprogressive outcome. By comparison, those with post-graduate schooling own 27 percent of all debt but would receive 37 percent of the benefit.

Yes, Your Major Matters – As Brookings scholar Adam Looney observes, “The people who are borrowing heavily to attend programs that offer no real labor market value — that is troubling.”

  • Criminal justice (73.2 percent)
  • Performing arts (63 percent)
  • Leisure and hospitality (59.8 percent)
  • Liberal arts (59.5 percent)
  • Business management (58.5 percent)

No Risk, No Reward – Those in favor of canceling student debt often favor free college, citing European examples to argue that providing higher education for little or no cost is not only possible in the United States, but beneficial to the economy and society more broadly.

Can We Just Forgive and Forget? – Given the facts, is student debt a genuine crisis? Or, is it just a case of millions suffering a collective buyer’s remorse? When looking broadly at who holds the debt, how much, and how it was incurred, the student debt issue looks less like a crisis and more of a logical — and predictable result — of choices made throughout various levels of society. America has become more educated (at least formally) than ever before, but the jobs simply aren’t there to deliver the pay-off. So it’s easy to understand why so many Americans are convinced they’ve been had.

For all the details go to The Federalist