Trish Regan: Student loan debt robs young people of the ability to take risk

The Democrats biggest so-called “star” - Rep. Alexandria Ocasio-Cortez - is jumping on the college debt bandwagon. She says becoming a Congresswoman is easier than paying off student loan debt.

Ocasio-Cortez joins a growing chorus of democrats calling out student loan debt because, and they’re right on this, it’s just too much.

Nearly 1.6 trillion dollars is owned by the youth of America — all for the privilege of attending, in most cases, some no-name college and to graduate with a degree that qualifies them for nothing -- all while saddling them with massive debt at a time in their lives that they should be willing to take on all the risk they possibly can. What better time to start a business than when you’re 22 and have effectively nothing to lose and little responsibilities?

Young people have every right to be mad, but they ought  to be mad, not at the rest of America, but at the institutions that sold them a bill of goods and a fancy diploma in the first place.

Many of these institutions are nothing but fronts for fraud. They’re peddling the promise of better social standing at the expense of America’s future. I’m not down on education. I’m all for it. However, we need, as a society, to recognize it for what it is. These institutions are happily and eagerly raising tuition rates because they can. And they can, because Uncle Sam is out there subsidizing and lending money. Student loans are courtesy of the U.S. government.

So think about it. What incentive does a university have to control costs when it has a steady supply of students being lent federal funds?

It reminds me of the subprime housing crisis.  Home prices kept going up because the government was willing to underwrite loans that often never should have been written! And, the banks played along and consumers did too.

The same thing is happening in college lending - when money is seemingly free. After all, what 18-year-old really understands the significance and magnitude of a $50K a year tuition loan? And when money is plentiful, cheap and being readily lent, consumers often make poor financial decisions. The colleges capitalize on that.

In 1966, tuition at NYU was $1,800.  In today’s dollars, that's about $14,000.  But you know how much NYU is charging now? Nearly $52,000 - and that doesn't include room and board! Education overall is outpacing inflation 3 to 1.


Why does this happen? Because this is an industry, like healthcare, that is supported by the government! Healthcare, by the way, has outpaced inflation by 2 to 1.

Students need to redirect their anger. Politicians need to redirect their anger. It’s not everyone else’s fault you can't repay that money. It’s the schools' fault for upping costs and offering nothing in return and it’s our government’s fault for encouraging such irresponsible behavior.