4/19/16 College Costs


This spring, about 13 million high school seniors will receive college acceptance letters.

Here’s what’s happening behind the headlines.

The cost of a four-year degree has gotten ridiculously expensive.  A single year at some private colleges can nearly equal the median income of a family of four.  And there doesn’t seem to be relief anytime soon.

By the time they leave college next year’s freshmen will have the highest-ever college loan debt. It shouldn’t be a surprise.  2014 grads owed, on average, nearly 30,000 dollars.

College debt has doubled in the past six years. At 1.3 trillion dollars it’s bigger than either credit card or car loan balances.

There are many reasons for this. Here are three.

There are no incentives for colleges to keep costs in check. Often, money isn’t spent wisely: light instructor loads, fringe classes, and high-salaried administrators add to the tab.

Second, the virtual government monopoly on student loans encourages the assumption of reckless debt. That’s because students can get loans to study just about anything.

And federal law prohibits discharging student-loan debt when someone declares bankruptcy. It’s like a scar.  You have it for life.  Lenders know they can literally pursue a borrower until the day they die.

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