How Obama's Student-Loan Policy Makes College Impossible to Afford
And the Democratic solution is to double down on it.
July 8, 2016
John Perazzo
One of the most crushing economic burdens that will plague today's young Americans for decades to come, is the debt they incur on their college student loans. Seven of every ten graduating collegians owe money on such loans, and their average debt is currently about $28,950 per borrower—up 68% from a decade ago. During the Obama administration, the cumulative sum of all student loan debt in the U.S. has risen from $600 billion to almost $1.4 trillion, a figure that continues to grow by an astounding $235 million per day.
We were brought to this sorry state-of-affairs by many years of bad policy, topped off by a particularly catastrophic “innovation” by Obama and the Democrats. For decades prior to the Obama years, students most commonly borrowed money for college by dealing with private lending institutions, most notably the Student Loan Marketing Association (known colloquially as Sallie Mae). Each time these lenders issued a student loan, they paid a fee to the federal government, which, in turn, assumed responsibility for covering the cost of any defaults. Knowing that taxpayers would pick up the tab for bad loans, the lenders relaxed their approval standards and made money readily available at low interest rates—even to students with weak credit credentials. This led, predictably, to record levels of borrowing.
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