You're missing the laws of supply and demand. Easy money creates demand. Demand leads to higher prices. College education is no different than the recent housing bubble we just went through. Access to easy mortgages meant anyone and everyone could buy a house so excess demand led to excess prices. Education, no different. Access to easy tuition payments leads to excess demand to get educated, tuition goes up to excess levels. Now here's the rub....when people default on their student loans it's not like the bank can come an repossess their education. There is no hard asset backing this debt. I'm pretty sure you can't unlearn someone and even if you could is there a market for used education? The education bubble could make the housing bubble look funny.
Can everyone take out a private loan for college for the full amount? If so, everyone can just take out the private loan, graduate college, and then just file for bankruptcy.
Youth is wasted on the young!! College is not worth that much money. For high school kids a major motivation for going to college is "you'll make more money over your lifetime." Yeah you will. But if you take on those loans you'll just become a debt slave and all your earnings won't go to you, they'll go to the banks. Which are, in fact, owned by the aristocracy.
i've made the argument before that student loans are the new indentured servitude. say you went to northwestern at the above quoted 52k / yr taking our 40k / yr in loans and making 12k / year more than you spend through some employment (imo very optimistic to be in this state w/out parents help and they give no merit based aid so if you are from a big family you are screwed, although the income based aid might have been significant) graduate with 40*1.08^3+40*1.08^2+40*1.08+40 k in loans or: 180 244.48 now your 180,250K in debt turns out at 8% (i think last year NU loans were 8.75%) 1500$~ / month to pay it off in 20 years. now i didn't have the best gpa coming out of there (lucky i got into trading) but the best jobs i was offered started at 44k / yr (only really consulting / ibanking were higher pay though unless you were an engineer) - so after paying your 18k in loans out, you were left with 26k / yr which after taxes is likely somewhere around 1600$/month--- and that is at a "top" university with a "real" major (econ not art history or some sham like communications) either way you are paying 1/3 of your income for the next 20 years? isn't that about what it cost to get to the US back in the day? ---beginning of digression now where exactly are all the new home buyers coming from that can afford all these 600k+ houses in chicago? makes me laugh to think people don't see another tremendous leg down in the housing market- oh it's a comin. i'll be shocked if chicago prices don't drop another 40%+ from here over the next decade, and that's not even counting the negative effects that raising interest rates or getting rid of home mortgage deductions will cause... but i digress now if somehow you could get a 25k limit on credit card or through various credit cards you could pay off 1/8th your loan and default on it easily, but what good is that going to do for you?
Exactly, it's the easy money that has put us in this position. Really, $52,000 per year for Northwestern and that doesn't include all those "incidental" expenses that a student might have if they wanted to actually leave the dorm room once in awhile OR fly back to their parents house over the holidays. Could it be close to $60,000 per year? The ludicrous part of this is that in many places in the US, a $60,000 per year job isn't that easy to come by and remember that's a gross salary, what do they actually make after taxes, etc. In 20 years the cost of these private schools has more than doubled, more likely 2.5 times the cost of 1991. Even back then it was no walk in the park for parents/students, but somehow it was manageable. Here we are now in a wrecked economy and the major funding for college educations amongst the middle class were those home equity loans when they had the housing piggy bank. That ain't coming back anytime soon, but the university system has turned into a protected racket. They build vanity buildings, libraries, athletic/student centers and rake in $50,000 per year/per student while delivering very mediocre results.
No it doesn't. Community colleges are relatively inexpensive and poor students CAN get grants for much of the tuition which doesn't need to be paid back. They can WORK to support themselves. I worked 40 hrs a week and carried a 12 hr course load in college. There was/is a whole generation that did the same. I do think loans are important but should be taken ONLY for tuition....NEVER NEVER NEVER as a means of support ..that is where the student gets into trouble. Live at home, work, and go to CC for the basic 1 or 2 years. If you are doing well and know what you want after college then get a loan, scholarship and move to a 4 yr degree program. The real scam is these 20 and 30K programs for "medical assistants", cosmetologist etc......make me sick.