Monday, April 20, 2009

My Thoughts On Student Loans

In Grim Job Market, Student Loans Are a Costly Burden --wherein the New York Times considers the students who borrow above their own eyeballs to pay for a degree that doesn't pay enough for them to get out of debt. I'm not a huge fan of the Financial Aid Game; institutions high and low have zero incentive to discourage students from borrowing money; frequently, their own federal subsidies are tied not just to enrollment but to disbursements and so their incentive is actually negative. The students I see most often falling into this trap are lower-income students who don't understand that loans aren't free money (despite what they may have heard). Meantime the cost of higher education continues to climb over and above the rate of inflation. I suspect the two things are at least somewhat related.

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