THE DEBT TRAP

Thoroughgoing report on the student-loan crisis.

Wall Street Journal writer Mitchell writes that student debt in this country “is the size of Canada’s economy,” amounting to $1.6 trillion. That debt is coupled with crippling terms that burden many borrowers with payments that will last throughout their working lives, mostly to service interest, and higher education has not delivered jobs that pay enough to cover them. Indeed, “far from making college affordable, student debt enabled schools to raise their prices in perpetuity, creating a higher education industrial complex that has driven up the price of college—and graduate school—to unprecedented levels.” It’s a vicious chicken-and-egg situation: Student loans are easily obtainable, so easy that many workers in stressful economic times return to school simply to qualify to take out loans to survive; because the money is so abundant, schools, underfunded in the case of most public institutions, feel no restraint to curb their costs. Mitchell tells the story of one woman who married a man who took advantage of her financially, then returned to school in order to better her job prospects and wound up owing a huge debt. She was one of the few to be allowed to discharge her debt legally, but only because a collection agent sympathized with her as she battled cancer. Such circumstances of emergency were not in the design of the loan program, which dates to the administration of Lyndon Johnson. As its founder told the author, “we unleashed a monster.” It’s a monster indeed, and no president since has done anything to tame it. Mitchell notes that under the Obama presidency, “Black families got into debt more than families of any other racial or ethnic group.” This urgent report makes a convincing case for reforming the loan program to allow students “a fair shot at college, at a reasonable price.”

An alarming study of an economic crisis long in the making—and entirely avoidable.