Over the last few years we have seen the levels of student loan debt rising at alarming rates. Today, the overall student debt is higher than both credit card debt and auto loan debt. With job opportunities being next to zero for recent college grads, it has many people wonder if college is even worth it. And the big question is "Who is responsible for this debt?" Should the borrowers be held responsible for every dime that they chose to borrow? Or should lenders be on the hook for some of it?
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Choice A: The Borrowers
Generally the first group of people to be blamed for the record levels of student debt are the students themselves. If they had not taken out loans at the rates they had, then there would not be a problem like there is.
Most believe that these students should be held responsible for what they borrowed. They knowingly used borrowed money to pay for college, so it's up to them to pay it back.
But how much of a choice did many of these kids have in the first place? Many were raised on the assumption that they would be going to college after high school and had very little conscious choice in the matter. Unless they were very good at finding grants, scholarships, and saving they inevitably had to take out a large loan to pay for college... an idea that had been pressed on them since grade school by teachers and parents.
Choice B: The Lenders
Maybe the lenders are the ones that are to blame for the student loan mess. They successfully lobbied congress to strip borrowers of any bankruptcy protection, which means that student loans will follow you to the grave, even if you can prove you're unable to make payments.
They are also being accused of predatory lending practices, much like the ones used by mortgage companies. It's not hard to get a student loan, even if you have bad credit and no cosigner.
But there wouldn't be a lending industry if there weren't people who wanted to borrow money for college. These businesses exist because there are people out there willing to sign promissory notes and borrow money from them.
Choice C: The Schools
Ahhh here we go. Who is the one charging the ridiculous amounts of money per semester for attending college? Who has the biggest hand in determining how much a student will have to borrow? The schools!
Over the last 20 years the cost of attending college has been rising at a rate not proportionate to the rest of the economy. Why is it suddenly so much more expensive to attend?
Well think about college 20 years ago and college today. Today students have high-speed internet and cable TV in every room on campus. They have new technologies and healthier food in the cafeterias. At the school I went to we had an all vegan dining hall. This stuff isn't free (or cheap!).
Choice D: All of the Above
The problem we're having is that we're trying to place blame on one group of people when many share the blame.
If colleges were competitively priced then costs would go down.
If costs went down students would have to borrow less and could be more responsible for smaller loans.
If lenders were a little more forgiving of hardships and willing to work WITH borrowers then more would be able to find a reasonable payment plan and pay off what they owe.
The situation is one that has to be addressed from many different angles. Currently, colleges are receiving less and less federal and state funding, which makes tuition costs rise. At the same time, there is legislation to DOUBLE the interest rate on federal student loans while retaining the lack of bankruptcy protection. How does this benefit students in any way?
In a time when everyone is worried about unemployment and the economy we can't be taking risks with young people who have taken the initiative to get an education.
We have to find a way to help everyone in this mess.
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