How Government-Guaranteed Student Loans Killed the American Dream for Millions

in education •  last year 

Student loans did not exist in their present form until the federal government passed the Higher Education Act of 1965, which had taxpayers guaranteeing loans made by private lenders to students. While the program might have had good intentions, it has had unforeseen harmful consequences.

Source: How Government-Guaranteed Student Loans Killed the American Dream for Millions - Foundation for Economic Education

Increased demand causes increases in cost whenever a resource is limited. There can be no doubt that whatever the intentions, the current government student loan program has increased demand substantially and artificially. And by artificially, I mean that lots of people get a college degree that is useless or at least not worth the cost simply because they don't really know what they want to do. College degrees can certainly be beneficial for a variety of reasons but you have to understand what you are investing in and do at least a cursory cost/benefit analysis.

This quote from the article says it all:

Financially, it makes no sense to take out a $165,000 loan for a master’s degree that leads to a job where the average annual salary is $38,000—yet thousands of young people are making this choice. Only when they graduate do they understand the reality of their situation as they live paycheck-to-paycheck and find it next-to-impossible to save for a home, retirement, or even a rainy-day fund.
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