Uncle Sam Isn’t a Loan Shark, But There Is a Better Way to Do Student Loans

If the definition of insanity is doing the same thing over and over and expecting a different result, then the nation’s student loan programs are sheer madness.Even in this strong economy, a stunning 11 percent of student loans are 90 days or more delinquent or are in default. With 45 million borrowers owing more than $1.56 trillion in student loans, a level three times higher than it was in 2006, student loan debt is fast becoming a national crisis. That students are carrying such crushing loan debt ought to be a reminder about the risks that develop when government programs supplant free market opportunities for competition and lower costs. Consider that student loans were largely federalized a decade ago on promises that Uncle Sam would be a better lender than private institutions, and all the while the feds would amass more money to spend on students.Instead, the spiral of debt has continued. As college costs rise, students borrow more, amassing debt obligations that will take them decades to repay, if at all. And, as the federal government primes the lending pump, the federal balance sheet becomes saddled with problematic debt.  Continue reading...