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The Student Loan Crisis that Is, Was, or Will Be

Posted by Tiffany Sanders, J.D.


The phrase “student loan crisis” gets thrown around a lot, and that’s no surprise. Student loan debt currently stands at more than $1.5 trillion nationwide, and default rates are high. We see reports of college graduates deep in debt and unable to obtain good-paying jobs, and hear that Millennials are delaying home ownership, independence, and even marriage because of their student loan obligations.

Nearly everyone seems in agreement that there is (or was, or will be) a student loan crisis in America. But, the perceived status of that crisis varies depending on the indicators considered.

For example, on May 15, The Hill published an article entitled There’s no denying it–a student loan crisis is comingThe author pointed to a Brookings report revealing that student loan default rates continue to rise 12 to 20 years after initial entry. That trend suggests that the already-high student loan default rates among more recent graduates may continue to climb in the coming years. With more than $80 billion in student loan debt already in default, that sounds like a crisis.

Why, then, does Forbes contributor Preston Cooper ask “Is The Student Loan Crisis Over?” the very next day?

Cooper is applying a different standard in assessing the state of the student loan crisis. He points to a stabilization in student debt levels: from 2012 to 2016, the median student loan debt carried by new graduates increased by only $23. Because of this “slowdown in undergraduate debt accumulation,” Cooper argues that it’s time to let go of “costly proposals” such as loan forgiveness and free college.

However, Cooper’s argument misses the mark. Assuming that he’s correct and new graduate debt burden is holding steady, it’s tough to see how that’s a good thing. With tens of billions of student debt already in default, many young adults forced to delay independence, and Millennial contributions to the economy limited by student loan debt, holding steady is hardly the goal–particularly since the Brookings report indicates that the likelihood of default is not dependent on the level of student loan debt a graduate carries.



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Posted on May 30th, 2018

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