What's even worse, is that the money just goes right to the colleges inflated overheads. No student ever "sees" the money from the loans. In this case, the cost of the schools just keeps going up so that the loans remain ~80pc of the cost of a degree. Now, how much money is in the Harvard Endowment? Stanford? Princeton? Massive amounts growing far in excess of inflation, and all Tax free. Why are these places even allowed to charge fees for tuition??
What's UC tuition nowadays? $3700 for resident tuition. $4900 when you include all the fees (which my $1000 figure did). Push everything forward 20 years and my parents would have no expectation to be making much more money now than they did then. I would be carrying more debt.
Pick your narrative for explaining what happened in the meantime. "Rich people demanding higher returns, enslave unsuspecting youth through their loan seller proxies" works for me.
1) You have capital seeking a return.
2) There exists a basic need that can be facilitated by the application of capital (a degree for a "good job").
3) You remove all the risk out of providing capital for filling the need through government guarantees.
4) You provide a rate of return that is higher than the government guaranteed rate on their own capital instruments (treasury bills).
#4 there, which gives you higher returns on low risk investments, creates a demand for those instruments. And that demand causes a supply of instruments to be created. And the regulation on that supply is minimal.
The result is you get financial institutions giving loans to students for useless degrees at inflated cost institutions knowing that the government has made defaulting nearly impossible (hence the low risk) and they can offer better rates than t-bills.
Students are being exploited exactly like unqualified home buyers were being exploited in the mortgage fiasco of 2008.
What annoys me about the journalistic coverage is that the 'rage views' are "Students are graduating with few prospects from college and a mountain of debt" whereas the bigger story is that "Rich people demanding higher returns, enslave unsuspecting youth through their loan seller proxies."