The numbers are frightening. Total amount owed in college loans across the country: $1 trillion (more than all U.S. households owe on credit cards). Number of undergraduates who have gone into debt for their education: two-thirds. Average student debt owed before accounting for interest, late-payment penalties, and the like: $27,650. What's worse, say the authors of "The Debt Crisis at American Colleges" in the August issue of The Atlantic, schools and banks are encouraging all of it. They argue colleges are expanding in extraneous, expensive ways and that modern campus life is gilded with too many luxuries (free music downloads at Penn State is just one example). Plus, with fewer parents chipping in, the cost taken on by 18-year olds can stay with them for decades. The most alarming warning is that the next subprime crisis could come from defaults on student debts. Similar to the housing disaster, the value of your education could shrink faster than you can build a Nevada subdivision. But unlike a foreclosed home recouping some costs from a short sale, and unlike a mortgage default that is dischargeable, student loans payments persist no matter what, even after bankruptcy. Not only can your wages and tax refunds be garnished, imagine your Social Security checks being docked. Is this our future? What's the alternative? Can a perfectly decent bachelor's degree be yours at a low price? What if you want to excel? Is there a roadmap to the Ivy League that costs less than a Nevada subdivision?
Guest:
Andrew Hacker, Professor, Department of Political Science, Queens College; co-author, Higher Education: How Colleges Are Wasting Our Money and Failing Our Kids---and What We Can Do About It