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The Student Loan Mess

The Student Loan Mess: How Good Intentions Created a Trillion-Dollar Problem

Joel Best
Eric Best
Copyright Date: 2014
Edition: 1
Pages: 246
https://www.jstor.org/stable/10.1525/j.ctt5vjzkh
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  • Book Info
    The Student Loan Mess
    Book Description:

    This illuminating investigation uncovers the full dimensions of the student loan disaster. A father and son team-one a best-selling sociologist, the other a former banker and current quantitative researcher-probes how we've reached the point at which student loan debt-now exceeding $1 trillion and predicted to reach $2 trillion by 2020-threatens to become the sequel to the mortgage meltdown. In spite of their good intentions, Americans have allowed concerns about deadbeat students, crushing debt, exploitative for-profit colleges, and changing attitudes about the purpose of college education to blind them to a growing crisis.With college costs climbing faster than the cost of living, how can access to higher education remain a central part of the American dream? With more than half of college students carrying an average debt of $27,000 at graduation, what are the prospects for young adults in the current economy? Examining how we've arrived at and how we might extricate ourselves from this grave social problem,The Student Loan Messis a must-read for everyone concerned about the future of American education.Hard facts about the student loan crisis:• Student loan debt is rising by more than $100 billion every year.• Among recent college students who are supposed to be repaying their loans, more than a third are delinquent.• Because student loans cannot be discharged through bankruptcy, the federal government misleadingly treats student loan debt as a government asset.• Higher default rates, spiraling college costs, and proposals for more generous terms for student borrowers make it increasingly likely that student loan policies will eventually cost taxpayers hundreds of billions of dollars.

    eISBN: 978-0-520-95844-9
    Subjects: Sociology

Table of Contents

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  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. List of Figures and Table
    (pp. vii-viii)
  4. ACKNOWLEDGMENTS
    (pp. ix-x)
  5. Introduction
    (pp. 1-12)

    In 2012, when we decided to write this book, student loans had become—really for the first time ever—a hot topic. Protesters in the Occupy Wall Street movement called for forgiving all student loan debt, even as the high unemployment rate encouraged more young people to stay out of the workforce and pursue a college education. There were news reports that total student loan debt had reached a trillion dollars, that Americans now owed more on student loans than on their credit cards. Young people leaving school were finding that their student loan debt made it vastly harder to...

  6. CHAPTER ONE Good Intentions and Wasted Brainpower: The First Student Loan Mess
    (pp. 13-42)

    When you were young, you doubtless had this conversation with a parent, a teacher, or some other older person who wanted to help you get ahead:

    OLDER PERSON: You need to do well in school.

    YOU: Why?

    OLDER PERSON: Because you need good grades to get into college.

    YOU: Why do I want to go to college?

    OLDER PERSON: Because you need a college education to get a good job.

    That put things in pretty practical terms. The older person probably didn’t talk about a love of learning or some refined sensibility that comes from higher education. Instead, you were...

  7. CHAPTER TWO Disillusionment and Deadbeats: The Second Student Loan Mess
    (pp. 43-75)

    In 1964, before the creation of Sallie Mae, even before LBJ’s Higher Education Act of 1965 passed,Newsweeknoted that “an alarming percentage of students have been lax in repaying government loans under the National Defense Education Act of 1958. . . . [S]ome $1.3 million . . .was overdue, a sum large enough to cause considerable concern in Washington.”¹ Inflation makes this amount seem deceptively small—$1.3 million 1964 dollars equals $9.8 million 2013 dollars—but even that corrected sum seems like small change for the federal government.

    Yet concern that student loans weren’t being repaid would become the...

  8. CHAPTER THREE Outrage and Crushing Debt: The Third Student Loan Mess
    (pp. 76-102)

    Even as policymakers concentrated on reducing defaults by student deadbeats during the second student loan mess, a new concern—what we’ll call thethird student loan mess—was taking form. It was already visible in 1994, when President Clinton argued that the direct loan program he’d advocated “will decrease the debt burden that crushes too many.”¹ By the beginning of the new century, references to student loans as “crushing debt” would become commonplace.

    As the twentieth century came to a close, self-help books aimed at those dealing with student loans began to appear, with titles such asThe Guerrilla Guide...

  9. CHAPTER FOUR Dread and the For-Profit Bubble: The Fourth Student Loan Mess
    (pp. 103-129)

    The first years of the twenty-first century were not kind to those who believe in the fundamental rationality of markets. The new millennium kicked off with the collapse of the dot-com bubble, only to be followed a few years later by the start of the Great Recession after the housing bubble burst. People had become bubble conscious, and they began to interpret student loans within that framework, in the process identifying a fourth student loan mess.

    A financial bubble occurs when people begin to pay increasingly higher prices for something, such as houses or dot-com stocks, because they expect the...

  10. CHAPTER FIVE What’s Next? Prospective Student Loan Messes
    (pp. 130-156)

    We have described the history of federal student loan policy as a series of messes, each involving policymakers focusing narrowly on particular aspects of student loans while, in the process, managing to ignore other aspects that would contribute to the next mess. Through the different messes, government student loan programs have continued to grow, with more people involved and more money at stake. While the government plays a vital part in student lending, there are signs that the student loan problem has grown too large to address one smaller mess at a time. There is no reason to imagine that...

  11. CHAPTER SIX Beyond Making Messes?
    (pp. 157-180)

    This book argues that the history of federal student loan policies is best understood as a series of messes in which attention became focused on some particular aspect of a larger problem and well-intentioned policies were devised to address each narrowly defined concern. These policies might even achieve their goals: after all, the creation of large federal student loan programs did solve the wasted brainpower mess, by giving every aspiring college student access to the funds needed to pay for higher education, just as making it nearly impossible to discharge student loan debt through bankruptcy addressed the deadbeat student mess....

  12. NOTES
    (pp. 181-202)
  13. REFERENCES
    (pp. 203-230)
  14. INDEX
    (pp. 231-233)