Young people get blamed for a lot of things. They’re called snowflakes for withering and melting at the least criticism or politically incorrect commentary. They are deemed irresponsible and accused of merely “adulting” when they manage to handle the life decisions typical of adults. And now the Department of Education’s latest financial report finds them failing to pay for their college expenses.
Of course, not all young people fit into these categories. Many are not snowflakes. Others have learned to carry responsibilities and forego the “adulting” pitfall. The report from the Office of the Inspector General at the Department of Education, however, does present damning evidence of young people’s dependence on government.
A Damning Report
The modern mantra is that all students need to attend university. Thus, young people continue to enter colleges in droves. As a result, they pile up massive amounts of debt, which they owe mainly to the federal government. Such student debt now stands at an astounding $1.4 trillion and growing.
The problem is that more and more graduates fail to pay back their loans. Federal loan programs can only work on the assumption that they will be paid back. In fact, interest collected on these loans has always been more than enough to cover costs. For decades, the government has even shown a surplus — a rare feat these days from any government agency.
But the federal loan programs are now projected to lose tens of billions of dollars.
And young people are getting the blame.
A Financial Mess Laid at the Doorstep of Young People
The main reason for the coming $36 billion shortfall is the popularity of so-called income-driven repayment plans. Students can set their monthly payments based on a percentage of their post-graduate income. They can later apply for loan forgiveness after 10, 20 or 25 years depending on their circumstances.
Thus, the number of students in the program has soared to well over six million. The generous terms of the loans will guarantee that many will pay back much less money than their tuition and other costs. Large loan balances will be forgiven.
What makes this debt so alarming is that earlier government accounting reports failed to foresee its coming. The Education Department’s financial report cites systemic underestimates of defaults, interest rates and program enrollment. Suddenly, they need to scramble to find funds to fill in the gap.
However, the real irresponsibility isn’t the young people who accept loans on such terms, but the government that offers them.
A Table of Free Cash
The students were guilty of entering a tent where there was a table with a huge sign that said “Free Money!” Perhaps some skeptical students resisted the temptation to pocket some cash. However, as they walked farther into the tent, they found administrators at more tables with even bigger signs and larger piles of money. They also saw many fellow-students who were helping themselves to the cash without being hauled away by police.
The students took the money. They should have known better since “there is no such thing as a free lunch.” Parents and teachers should have taught them this lesson early in life. However, in and of itself, accepting the student loan was no crime.
In this case, the blame should go chiefly to the people behind the table frantically offering them free cash. In a normal age, people who lend money they know won’t be repaid would be committed to mental institutions. For years, however, they have found a comfortable place in government.
Time to Blame the Madmen
It is time to blame the madmen. The first cause of this problem is the federal education establishment that came up with and pushed these “free money” Ponzi-scheme programs. These loan programs should never have been approved because they are not loans but handouts.
It is time to blame those who cannot tell the difference between a loan and a grant. Such officials abuse and waste the taxpayers’ money. They teach students that acts have no consequences; others will always pick up the tab for their shortcomings. They teach students that a tepid effort to repay a loan will be rewarded the same as one honestly and faithfully repaid in full.
It is time to blame the madmen who are disconnected from the real world. Legislators do students no favors by shielding them from misfortune that is part of life. College students should not be put into a system that treats them like children.
Let the program administrators be blamed for their fraudulent advertising and criminal underestimating of the program costs and enrollment. They enabled the huge deficit. They are guilty of dereliction of duty. They spread everywhere the systemic irresponsibility so often found in gargantuan socialist bureaucracies.
A Broken System
The educational system is broken. It produces irresponsible students, in part, because the system itself itself is irresponsible. Alas, the students learn too well the bad lessons they are taught.
It is time to banish the socialist madmen doing mad things; not debt-shackle our young people. They deserve better.
As seen on The Stream.