Student Loans

Are Millennials Responsible for Their Own Student Debt?

Most college students borrow responsibly but the media can't stop showcasing people whose behavior is inexplicable and indefensible.


As the father to sons who are 25 and 17 years old, I love millennials and Generation Z. But it's getting harder and harder to feel sympathy for kids born between 1981 and 2012 (give or take).

It's not all—or maybe even mostly—their fault. Much of the problem stems from the ways in which the media covers the plight of younger Americans, especially the supposedly catastrophic amount of student loan debt they have taken on simply to get a college degree which is now, we're told, a nearly meaningless piece of paper that no longer "automatically" guarantees admission to the "middle class." A recent story in The Wall Street Journal exemplifies this approach. It's titled "Playing Catch-Up in the Game of Life: Millennials Approach Middle Age in Crisis" and promises "New data show they're in worse financial shape than every preceding living generation and may never recover." Mostly, it highlights individuals and couples who have tons of student debt and, as a result, supposedly can't buy houses, have kids, or even get married.

In fact, it's far from clear that crude economics is driving, say, the reduction in fertility rates, which have been dropping for decades everywhere in the world and are tied to increases in female autonomy. And for all the talk about generational poverty, it's not immediately clear that all is darkness. According to a Pew study in 2018, millennial households now "match the highest household income for their age group." Throw in higher rates of advanced education, and the future actually looks promising. And it appears that millennials may be better off in various ways than Gen X was at the same stage of life.

In any case, there is so much wrong with the narrative about student loan debt that it's hard to know where to start. In the first place, more people, including more low-income people, are going to college than ever before and college grads have much higher lifetime earnings and much lower unemployment rates than folks with just a high school diploma, an associate's degree, or a few years of college. As the economist Scott Winship has written, "If we're counting rising student indebtedness on the debt side of the ledger, shouldn't we count the value of the asset financed by the debt (human capital) on the asset side?" And despite the aggregate $1.5 trillion out there in student debt, the average and median amounts owed by individuals students are hardly breathtaking.

According to data from Lending Tree, for instance, about 70 percent of the class of 2018 took out loans; their median monthly payment was $222. The average loan amount (which will be higher than the median) for graduates with debt was about $30,000. According to Pew:

The median borrower with outstanding student loan debt for his or her own education owed $17,000 in 2016. The amount owed varies considerably, however. A quarter of borrowers with outstanding debt reported owing $7,000 or less, while another quarter owed $43,000 or more.

So most borrowers are actually acting responsibly. College grads make about 80 percent more than high school grads, so taking on debt isn't stupid. And even though college has been getting more expensive, the wage premium remains high enough that the number of years needed to recoup the price of college hasn't increased for decades, according to work done by the New York Federal Reserve:

Chart 2 shows Years to Recoup the Cost of a Bachelors Degree 1970-2013

It's extremely difficult to get straight answers about many aspects of education-related debt. Often, it's not clear if the debt for a given year includes loans for grad school, including law school or medical school, which are not just much more expensive but also much more remunerative and optional. Ninety percent of law school grads borrow, for instance, and the average debt load is $127,000 for people attending private schools and $88,000 for those going to state schools. Three-quarters of med students take out loans that average around $200,000, but the typical doctor makes between $150,000 and $312,000 per year, so the debt isn't particularly tough to pay back. Should we feel bad for lawyers and doctors?

It's obviously preferable to graduate from college with little or no debt. But media accounts inevitably gravitate to people with eye-popping amounts of debt that are nobody's fault but their own. Worse still, the reports rarely include any sort of detailed information that would allow a reader to get a better sense of the individual's life choices. Yes, relatively cheap loans doubtlessly entice some people to go to college who wouldn't if they had to pay higher interest rates (if student loans were dischargeable in bankruptcy proceedings, interest rates—even those offered by the federal government, which disburses about 90 percent of student loan dollars—would be much higher). But ultimately the borrower has to take responsibility for his or her actions. I say that as someone who paid his way through undergraduate and graduate school and sweated blood every time I signed for a student loan. Youth is a time of great folly, yes, but you know exactly how much you're going to be paying back for exactly how long.

In The Wall Street Journal story, we meet a 32-year-old woman living in Chicago who "is a renter who is single and earns $75,000 a year [working for the city]. She also owes $102,000 in student loans and $10,000 in credit-card debt." Her salary is actually kind of great, especially for someone her age. The median household income for Chicago is about $53,000 and the median per capita income there is $33,000. She's got three times the average student debt, but we have no way of knowing where she went to college or whether there's a grad degree tucked into that.

Making $75,000 a year breaks down to $6,250 a month. Assume she's paying 33 percent in total taxes, that brings her monthly take-home pay to about $4,200. Assuming she's paying 7 percent on her loans, she's on the hook for about $1,200 a month, leaving $3,000 to cover rent, food, and everything else. That's not great, but it's doable. In real dollars, it's about $20,000 more than I was bringing home in the mid-'90s when I started at Reason and lived in Los Angeles with a non-working spouse and 1-year-old son. Does she have roommates? Why did she spend so much on college? Reading this story made me think of last year's Time cover story on teachers who supposedly had to work two or three extra jobs because they're "not paid for the work [they] do." So much of household finance is tied to spending levels, which are never really discussed.

We also meet a thirty-something couple that "run a financial-advice website, whittling away at their combined student debt of $377,000." What? One of them is a lawyer, so let's assume that as much as $127,000 of the debt went toward a private school law degree. There's still a quarter of a million dollars in student debt to account for. The story doesn't provide any extenuating circumstances and, to be honest, I can't imagine any that would explain such as situation other than really dumb choices. Should we as a society be ready to forgive such mistakes via universal debt relief programs proposed by politicians such as Sens. Elizabeth Warren (D–Mass.) and Bernie Sanders (I–Vt.)? That seems like an insult and an outrage to everybody, parent and student alike, who scrimped and saved and went to schools they could afford.

In an Associated Press story about Robert F. Smith, the billionaire who just announced he would pay off all the student debt of Morehouse College's class of 2019, we meet a 22-year-old finance major with an inexplicably and shockingly high amount of student debt—$200,000, an amount that would take him 25 years to pay off "at half his monthly salary, per his calculations." When Smith made his pledge during Morehouse's commencement, the student wept.

"I don't have to live off of peanut butter and jelly sandwiches. I was shocked. My heart dropped. We all cried. In the moment it was like a burden had been taken off."

Surely I'm not the only one who's wondering how the hell someone—a finance major, of all people—ended up $200,000 in hock by graduation. The full list price for Morehouse is almost $50,000 a year, but the average net price is $32,000 after grants and scholarships are factored in. Even if he put all four years on loans, that should be $128,000, not $200,000. More to the point, who would do such a thing? The average net price of nearby Georgia State is $15,000. Borrowing $200,000 for a bachelor's degree is simply inexplicable.

I've written often about how younger Americans are indeed being screwed by my own generation, the baby boomers. Old-age entitlements are a brutal form of generational warfare that systematically rob from the relatively young and poor in order to give to the objectively old and rich. The 2008 financial crisis has further beggared the young, who have also grown up in a century with lower-than-average economic growth (thank you, persistent deficit spending and massive national debt).

Older people in America have a lot of explaining to do, and we need to reform all sorts of policies that slow economic growth and direct all sorts of unearned wealth to people who don't need it. But younger Americans—at least those who manage to royally screw up their finances by graduation day—also need to be held accountable.

NEXT: House Freedom Caucus Too Busy Scolding Justin Amash To Care About Today's Bipartisan Budget Apocalypse

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  1. When I first read this headline I though, ‘Are people responsible for their own actions?… yes, no shit they are.’ I thought it was going to be an article shifting blame to society or some nonsense.

    Upon actually reading the article, it’s very well written. Good stuff, Nick. It bugs me that so many people (millennial or not) believe that they are simply at the mercy of chance for their financial situations. This piece does a good job dispelling that myth.

    1. The two biggest problems here are:
      1.)Government student loans: EVERY state has low-priced community colleges, which suffice for the first two years of college, and are within most folks’,even non-rich folks’, budget.
      2.)Irrational students: Do you really need to go to college? : Probably not, unless you are seeking a degree in law, medicine, accounting and the like. The biggest benefit of a four year college degree is NOT the degree, but simply proof that you can set out to do a difficult task and show you can finish it. I have hired people with only a community college degree, as I they had proved they could set a relatively difficult goal and master it. With the aforementioned exceptions, businesses are only really looking for folks who can prove they can work hard and win, not whether they had all A’s and gradated from Harvard.

      1. Probably not, unless you are seeking a degree in law, medicine, accounting and the like.

        There is also room for academics and scholars in the world. Though not nearly enough to justify the numbers of PhDs in academic subjects that are being produced.

    2. -not everyone lives within striking distance of community colleges.

      a 2 year associates degree in history at a community college is not the same as a BA from a prestige college in terms of what you learn or the value of the degree. you are saying if your broke learn auto mechanics. students are saying there value is in the BA. If you won’t help me I will borrow the money cause everything that has been said about Higher Ed for the less 1000 years makes me believe it is extremely valuable.

      -states used to heavily subsidize their 4 year institutions. now they don’t. We tell low income folks , yeah we value Higher Ed, but we aren’t willing to subsidize it like we do for instance coal or oil and gas.

  2. YES.

  3. One unintended consequence of Smith the benefactor is that some other students will be less inclined to borrow responsibly now, hoping he or someone like him will come along to bail them out too.
    It must suck to be one of those Morehouse grads who worked his
    ass off in after school jobs and had no debt while his buddies went off to Cancun every spring break and borrowed to the hilt.

    1. “In the moment it was like a burden had been taken off.”

      Not to worry. This Einstein will saddle himself with a new burden shortly. And then complain about the unfairness of it all.

      1. Those loans are predatory and I would hope this finance major would see the true nature of the educational loan system.

        Having gone through a similar path, I am going to press my children into making smarter education decisions. There is no way I am going to let them choose a degree in Lesbian Baroque Stage Design for $150k.

        I just have to believe a lot of people like me with kids will steer them away from frivolous degrees in the future.

    2. It must suck to be one of those Morehouse grads who worked his ass off in after school jobs and had no debt […]

      That hasn’t been a thing in decades.

  4. A recent story in The Wall Street Journal exemplifies this approach. It’s titled “Playing Catch-Up in the Game of Life: Millennials Approach Middle Age in Crisis” and promises “New data show they’re in worse financial shape than every preceding living generation and may never recover.” Mostly, it highlights individuals and couples who have tons of student debt and, as a result, supposedly can’t buy houses, have kids, or even get married.

    From David Harsani at The Federalist, A great response to the WSJ article

  5. >>>Older people in America have a lot of explaining to do

    the ones who achieved graft through elective office yes, my 70 year-old parents not so much

    >>>and we need to reform all sorts of policies that slow economic growth


    1. Yes, this bugged me. It sure wasn’t me who spent all that money and waged so many wars (drugs, sex, immigrants, trade, Iraq).

    2. Can we rail at the one’s who got all the benefits of being old enough in the 70’s and 80’s to start their careers before convincing the government to make it harder for their kids to enter the same profession?

  6. Millennials should be responsible for their debt but maybe their vacuous parents can also help by suggesting they spend two years in a community college then transfer to a 4 year institution. I have heard this myth that employers look down on students who take some classes at a community college. It is a stupid idea perpetuated by baby boomers, not Millennials

    1. I have heard this myth that employers look down on students who take some classes at a community college.

      As someone who spent four years at a community college and two at a four-year institution I can attest that this is 100% a myth. Employers care what name is on the diploma. Full stop.

    2. My diploma has a big asterisk to denote I transferred from a community college. It also lists my ranking from high school. My elementary school records are included using steganography.

      There are competitive careers where employers care about such details. Most employers don’t care where you went. My degree isn’t even in the same field.

    3. The top end of the Millennials are nearly 40 years old. I highly doubt their parents telling them to go to community college first is really going to help now.

    4. That’s what our kids did and they were able to get associates degrees without any debt. My daughter got a job at a college and finished her bachelors without any debt because she also worked full time. She actually finished with quite a bit of savings and an incredible credit score for someone her age. She took a year off travel before she came back and a better job at the same college.

      Now, she’s finishing up her masters and I think she’s taken out several small loans to cover some of the school costs but is still working full time so didn’t need money to cover living expenses. She’ll start a PhD program at a state school afterward. That will be her first real “college experience”, one where she will be only going to school and focusing on education. She’ll have to take out some loans for that but considering she’ll end up with a PhD and a small amount of debt (much less than most people have for a bachelors), it’s a decent investment.

      As an ex-employer, I never scoured over any transcripts to see where and when and how they took their classes or what their grades. If they had the degree I was looking for, that was fine. I also never required a degree or even a high school diploma for most of the positions I hired for. If they showed me they could do the job and I liked them, I hired them.

    5. None of my employers have ever asked me for my transcripts. They only wanted to see my diploma.

  7. We also meet a thirty-something couple that “run a financial-advice website, whittling away at their combined student debt of $377,000.”


  8. “Should we feel bad for lawyers and doctors?”

    Fuck no!!! Absolutely NOT!!!

    THESE are the bastards and parasites that ride high on suppressing and oppressing the rest of us, with endless reqs for more and more and more degrees, licenses, and credentials of all kinds! The usual, special interests and “diffuse costs, concentrated benefits”, of course…

    Making education FREE (or forgiving debts) just means you deflate the value of your degrees! We already have so many doctors and lawyers, that we have to invent make-work to keep them all busy. You want to start a small business? Here, fill out these 345 forms… BUT, the lawyers can help you fill them out, for a small fee!
    You want to scratch your own ass? Hey, there’s some VERY delicate bodily tissues down there!!! Here, get you a prescription for a certified proctologist specializing in ass-scratchology! For permission to SCRATCH YER OWN ASS, fer Chrissakes!!!

    If we keep this up, we will need a prescription for booger rags, and permission to blow our noses, to justify more education for more doctors…

    1. Lawyers and doctors vote overwhelmingly democrat

  9. we meet a 22-year-old finance major with an inexplicably and shockingly high amount of student debt: $200,000, an amount that would take him 25 years to pay off “at half his monthly salary, per his calculations.”

    Ran through a mortgage calculator at 5% – it’s $1169/month.

    If you majored in FINANCE to get an average annual salary of $28K/year, you have seriously fucked up.

    1. It doesn’t take a degree of any sort to make way more than that. FFS, Comcast is paying $18/hr. In my area (eastern WA) for entry level CSR to handle inbound calls. That equates to about $36k per year. No special training or school required

  10. Are Millennials Responsible-

    Stop right there.

  11. Last stupid story I remember was some damned fool teacher in Massachusetts who quit his job and lived off student loans while going to grad school for a master’s (surely not a PhD!) in puppetology, and then was horrified to find all that $$$$ student loan didn’t somehow endow a master’s in puppetology with the magic earning potential it deserved.

    1. Funny thing – I had a friend from high school (back in ’85) who made a living as a puppeteer. It didn’t make him rich, but he had enough to get by.

      No college education, he just went out and did it.

      Most of his work was library tours and things like that, but he also did commercials and movie work.

      1. Now you need at least a masters in puppetry to even get your foot in the door.

        1. CGI killed puppetry, but I bet you could still eke out a living in it if you were entrepreneurial enough.

          Puppets + cameras + script + internet = something (maybe)

          1. Team America!

          2. if you were entrepreneurial enough.

            They wrote a book about that. It is called The Very, Very, Very Sad Sock Puppet.

            It is not a children’s’ book.

          3. Puppets + cameras + script + internet = something (maybe)

            Glove and Boots

    2. “Last stupid story I remember was some damned fool teacher in Massachusetts who quit his job and lived off student loans while going to grad school for a master’s (surely not a PhD!) in puppetology, and then was horrified to find all that $$$$ student loan didn’t somehow endow a master’s in puppetology with the magic earning potential it deserved.”

      We can all be thankful he is no longer ‘teaching’…

  12. Can we make this free college/debt forgiveness thing a once-in-a-lifetime thing? I wouldn’t mind retiring a few years early to go back to college.

  13. Clearly Nick does not have a degree in finance. I am a college professor who teaches at a university in the college of business. I am not sending my oldest kid to college. No fucking way.

    She’s going to cosmetology school. In 18 months she’ll be able to work professionally. While her peers are still in school accruing debt, she will be most likely working and earning money while living at home. So she will be earning money for 30 months prior to her peers getting out of college.

    Here’s the kicker, there is a concept know as the time value of money. That money will earn interest, and so forth. Money earned today is worth more than money earned in the future. Basic finance. Although she may earn a lower rate than her peers, they will have to save more money over time for their saving to have the same earning capacity as my daughter’s savings. These are the same calculations you do to show people that retirement savings accrued earlier is more valuable than differing that saving even if you save larger amounts in the future.

    Debt payments is essentially savings that’s not being saved. You lose all of the compounded interest you’d otherwise have.

    Sorry, Nick, your analysis lacks any real financial modeling. Too many people with debt lose the incredible advantage gained with compounded interest.

    1. You are correct… And also not correct. Because it depends.

      If one is comparing being a carpenter to being a school teacher who racks up 4 years worth of debt, they’re going to be better off financially being a carpenter! Because teachers genuinely don’t make much money, but still have to put in the time in school.

      But if you’re comparing going to cosmetology school to studying CompSci, the CompSci grad will probably catch up and pass the other person before too long, even considering the time value of money.

      Then, to add complication, there’s also the fact that WORKING as an employee in a hair salon may net somebody XYZ amount… But that also gets them into an industry where it’s not to tough to open your own place, which could put them into 6 figure territory easily if they have a head for business.

      THEN there’s the question of what the person WANTS to do with their life. Kids don’t always even know… But some do. This should count for something too.

      The truth is one can pick a lucrative non college career, or not. One can do the same for ones that require college. How well somebody comes out depends on what they pick, what their alternative options are, and also what they want to do with themselves.

      I would not advise ANYBODY to get a gender studies degree… But a really smart kid becoming a doctor? If they like helping people? Why the hell shouldn’t they?

      I myself never went to college, even though I was basically born to skate right into a top college with little effort. I went into business. I sometimes feel bad that I’m not MORE successful than I am, because I know I’ve made mistakes, and have the potential to do more… I’ve sometimes wondered if I should have tried to get into a fancy school like Harvard or something… But I saw some stats a couple years back. Apparently I make more money than your average Harvard grad! So I guess I’m not doing too bad for myself.

      Bottom line is, figure out what you want to do for personal fulfillment, and then fact check it against reality. If they results seem acceptable, go for it.

      1. The error that Nick made was to solely looked at income. He did zero research into wealth, which is far more important than income.

        Someone with debt payments with a higher income may still accrue wealth more slowly than someone with no debt and a lower income.

        The ability to save is something that completely deflated Nick’s entire argument. Probably his worst article, and it’s really a shitty spin article.

        1. Totally. As a business owner, I am all about wealth building. If you look at the percentage of my income that I invest (but could theoretically pocket) in one way or another, it’s through the roof most years. This year I think it will be close to 40%!

          Most middle class minded people just don’t understand investing, the power of compounding returns, etc. It’s sad too, because with just a TINY bit more financial responsibility most people could in fact end up having more shiny things than they do now, with less work. Oh well, I’m not a motivational speaker, so people can do what they want.

    2. Is it bad the only thing I got out of this post was “Why does it take 18 months to learn cosmetology?” but occupational licensing nightmares are a separate thing I guess.

      1. Gotta’ play by the rules of the system sometimes. I don’t agree with it, but it’s the reality we live in.

      2. 1) Cosmetology courses teach the handling and application of a number of dangerous chemicals. They need to be sure the graduates have learned the safe use of these, as well as how to style hair and apply makeup, etc.

        2) Most of the students will be somewhat below average in intelligence, so I expect the courses to compensate for that with a slow pace and lots of repetition.

        3) If state law requires 18 months, they’ll stretch it out that long – and the chances are that the cosmetology schools lobbied to stretch it out, since they’ll make more money. (Those that were already experienced cosmeticians under an easier to obtain license or no license at all would also have lobbied, first to ensure they are grandfathered in, and second to stretch out the training and hinder new competition.)

        Point 2 has another side that Gozar & Vek ignored: Most cosmeticians could not do well in CompSci or other STEM fields. Conversely, someone who has the mind to excel at computer programming will probably go crazy with boredom working in a beauty salon. (There is an escape hatch for some – opening their own shops or finding a job managing a shop. That gives them a constant stream of challenges such as filling out masses of paperwork to comply with illogical regulations, and dealing with the problems that come with not-so-bright.)

        1. I actually did address your final point… And I always do. People always ignore that most people don’t have a high enough IQ to be an engineer/whatever. This is the single biggest flaw in the send everybody to college argument, and a lot of other arguments.

          I’ve become a lot more deterministic. The truth is people are born the way they’re born… And with only a little wiggle room in there, they’re largely stuck within a narrow set of possibilities. I have a high IQ, and have made a number of decisions I consider to be really dumb in hindsight… Yet I make multiple times the average income, and am doing awesome by normal people standards. And this is with me screwing up. Most people would be lucky to do as well as me in a state I feel disappointed in myself about.

          So realistic expectations for people in different parts of the IQ spectrum is something that REALLY needs to be injected into the conversation and discussed rationally. Because we have spent trillions of dollars on various programs that are doomed to fail because they ignore this obvious reality.

  14. Student loan payments including interest should be pre tax.

    1. Umm… how about a rational argument as to why this should be. Or is it just a flight of fancy thought that popped into your head.

      Anything that reduced the cost of borrowing, whether making a tax deduction, or elizabeth warren type money give away, will increase the cost to someone else (that ‘free’ tax money comes from, wait for it… taxpayers) and further will only serve to increase the demand for the same. Colleges will, in the face of increasing money supply, further increase their tuition. In the end, tax breaks for the middle man (the students) merely funnels money from the state (taxpayers) to colleges.

      1. The rational argument is that is investment on future income.

        If I want to open a pizza place I only pay income tax on profits I take, not the pizza oven.

        If I am an endodontist after graduation I can go to an educational conference in Hawaii, Vegas, Disney, whatever.

        You are required by law to have approved credits. The air fee, the conference fee, every dime is totally tax deductible. Meaning no income tax. Same for any other business expense.

        But you pay post tax dollars for the initial investment to get the Dental or whatever degree.

        Simple way to work it which would encourage people to get into STEM fields, teaching, other useful jobs and help pay off the costs is lower taxes.

        1. What he fuck?

          That makes no sense. None of it. Your rationale is horribly flawed.

          The pizza oven is a capital expense which is depreciated over time. The energy you pay for to operate the pizza oven is an operational expense. The rent is an operational expense. Repairs to the oven are an operational expense.

          CMEs are an expense too, an operational expense. The “E” part is for Education.

          Student loan interest is also tax deductible. So that’s the credit you’re looking for, and it already exists.

          1. No the interest rate is capped at 80k income.

            The principle is paid post tax.

            Interest rates are between about 5-8% with fees added.

            You can deduct interest only up to around $2500 per year.

            My proposal is that all payments including principle back on the loan are pre tax. Comes right off the line before income tax. So you made whatever, 80k and paid 20k into student loans this year. Your tax base is now 60k. That is what I am proposing instead of direct government repay or forgiveness whatever that is.

            Bit more radical than what what you are in favor of.

  15. It’s so strange reading about responsibility while everyone ignores one group that gets off Scott free on shitty lending that decided it was a good idea to give out these asinine loans. Like seriously, who thought it was a good idea to even give out $200k in loans for a degree that makes $28k/year?

    So where’s the responsibility there? None? So lending is immune to market pressures. Cool.

    1. Student loans are overwhelming made or guaranteed by the government, just like mortgages. On top of that, anti discrimination laws force banks to give loans to unsuitable borrowers if they want to lend money at all.

      So, the responsibility is with progressive politicians, as usual.

      1. Based on the lack of republicans shouting about this pyramid scheme, I’ll put it at the feet of the entire federal government.

        If only there were libertarians shouting about this from the rooftops instead of virtue signalling to progressives about impeachment

        1. Based on the lack of republicans shouting about this pyramid scheme,

          Most Republicans are progressives as well, they just differ on some details.

      2. Right. I’d kick the government out of the student lending business, but inject risk for lenders by making student loans dischargeable in bankruptcy (probably after a waiting period and means-testing).

        Lenders then have an incentive to make sure the loan is a sensible bet—-$40k/year for a Gender Studies Major? Hell no. 35k/year at Fly-by-Night State? Hell no. 50k/year for engineering major at MIT? Sure.

        By making credit risk a reality for lenders, you inject market forces for schools. “Hey—we have to focus on the value of our education. Our school is too shitty to charge this much.” Ideally, it would drive down the cost of education.

        1. Right. I’d kick the government out of the student lending business, but inject risk for lenders by making student loans dischargeable in bankruptcy (probably after a waiting period and means-testing).

          That’s how things started. Then government put pressure on lenders because their rates were too high and because they had racial disparities among their borrowers. When banks declined to make loans under the conditions the government wanted, the government took over.

          I’m not sure how you are going to reverse that process; it is economically impossible to have a private student loan market under the conditions the government wants to impose.

          1. . . . I wouldn’t enforce disparate impact fair lending laws, and wouldn’t make lenders make loans if they don’t want to do so.

  16. Good article, Nick.

  17. This is definitely one of Nick’s better posts.

    I borrowed a bunch of money to go back to school in my 30s, but got a bachelors and masters degree in a STEM field, and now make pretty good money. It was kinda like taking a 5 year sabbatical, only debt financed. I know it wasn’t the most financially sound decision, but I desperately needed to change careers and wanted to learn some real shit. My loan payments suck, but I knew what I was getting into.

    These loan forgiveness proposals are idiotic. Blame the subsidies and other government interference in blowing the cost of college way outta proportion. Greedy schools and administrators don’t help any, either.

  18. Even if he put all four years on loans, that should be $128,000, not $200,000

    Some people borrow a ton extra and just live on it or pay other bills with it, believe it or not.

    1. It’s a legit thing I have seen first hand that a lot of these students borrow for ALL their living expenses… Which includes lots of going out eating, drinking, etc. The majority probably aren’t TOO irresponsible, but some definitely are. I’ve met them.

    2. Well yeah. There have been studies on this. By trying to work a job to pay for some expenses (rent, food, utilities, etc.) you often end up taking an academic hit (less time spent studying, more time spent stressed). By trying to squeeze the money, you often end up adding semesters, which then adds more money through more semesters of tuition.

      1. Ish. That’s mostly BS though. First off, as far as I know you still pay by the class… Not by the year. So if you short one class a semester, and drag it out a touch more, you could free up time and still be going almost full steam. Not that there isn’t plenty of free time to work a part time job anyway. They’re not in class/studying 16 hours a day.

        There is plenty of time to work a few hours a week, and put in the effort required to do your school work. Lots of people did it in the past, and lots of people still do it.

        1. Some schools (architecture for example) don’t come out and say it, but they actually expect you to be a full time student and not work.

          Which, especially for architecture, is fucking stupid. I could have spent most of my master’s studios just working for a firm and gotten better experience. Instead I worked a shitty job and took out way more loans then I probably should have. But I’m also working my ass off and set up a payment plan.

          And don’t even get me started on the ridiculous credentialism that the state requires for you to even work in your desired field (in order to sit for the architecture license exam you HAVE to get a master’s degree).

  19. In the case of unsustainable debt, the pusher and the addict are both to blame, the addict for taking it, and the pusher for providing it.

    If these loans would float in the private market, more power to them. But many of these loans would not be made by a private lender unless the government socialized the costs.

    1. THIS. But seriously, how do these kids parents not give them better council on some of this stuff too. WTF.

      1. Parents in middle-class families, who often have more personal familiarity with student loans, college, and middle-class lifestyles, often do.

        Parents in lower-class families, who often don’t, often don’t.

        We don’t talk about it that way, but this is very-much a class issue.

        1. It’s true. And I was thinking that as I typed it…

          The problem with lower class people is they’re lower class people. Frankly in our country, which is actually quite meritocratic, most such people are simply low IQ. They’re not very smart, or are outright morons. But thanks to the variability in how genes get kicked out these people sometimes have reasonably intelligent kids, even though it is statistically less likely since IQ is mostly inherited.

          But even a smart kid is still a kid… And kids can make dumb decisions.

          *Sigh* The truth is that stupid people are responsible for almost all the problems in the world… But there’s really nothing to be done about it until genetically engineering babies is a thing.

      2. Parents aren’t always aware of it, either.
        Mine weren’t. I think their parents paid for the one or two semesters they took before dropping out.

        It was all a bit of a wake up call when I graduated. Nice thing is, my kids won’t be clueless.

  20. I’ve written often about how younger Americans are indeed being screwed by my own generation, the baby boomers. Please see here : Republik Adventure

  21. We also meet a thirty-something couple that “run a financial-advice website, whittling away at their combined student debt of $377,000.”

    Let me guess — early retiree FIRE morons, uniquely qualified to give financial advice to the masses?

    1. Hey man, don’t knock FIRE. It is actually a doable thing for a lot of people in a lot of situations. Why anybody would want to fully retire that young is beyond me… I could have already been retired by now if I’d made made 2 or 3 semi major decisions differently, and I’m still south of 35… But I am now shooting for being ABLE to retire by 40 on a modest income. I will just continue to work anyway, I just like the idea of KNOWING I could theoretically say “Fuck it!” and stop.

  22. I have mixed feeling about this.
    I’m a software engineer who dropped out of college. I hit 6 figure salaries before I turned 30 and not in super expensive areas like California or New York. And that’s because I’m damn good at what I do and got that way doing practical programming as a hobbyist in my teens. I learned more from my first month at a full time job after dropping out than in 2 years at college where I learned next to nothing of practical value. In school, all I got (outside of mostly pointless GE courses) was computer science courses that were focused entirely on theory and not practice taught by professors who have either never left academia or are rejects from real world programming jobs. I currently work at a company full oh PhDs who can write a mean white paper, but couldn’t actually make anything work to save their lives and are running the company into the ground. My entire career experience has been that formal education has next to no correlation to being good at what you do. If at least in theory the job market is a meritocracy, that should imply formal education shouldn’t have a correlation to your success and income level.
    On the flip side, I realized that I lucked out getting into the business in the late 90s. At that point, there was a much greater demand for engineers. This “everyone must go to college” garbage wasn’t nearly as widespread as today. I’m not sure today anybody would give a 20 year old college drop out a chance even if they did know their stuff. For those who did go to college, the cost wasn’t nearly as inflated due to societal pressure causing artificially high demand and government loans destroying all incentives to keep tuition cost reasonable.
    Today’s reality is despite that college has little to do with gaining job skills, in most cases it’s a requirement to get in the door to start a decent paying career and it’s pretty damn expensive. The options really are enter your career in your mid early 20s with lots of debt or have a considerably lower chance of ever having a good salary. Neither are that great. Considering interest on the college loan debt, several years of missed income while you’re going to school, and the considerably higher income taxes you’ll be paying due to progressive taxation with the expected higher salary, I’m not 100% sure it does pay off to go to college even for something marketable like STEM. For any bullshit liberal arts major there’s no way in hell it’s worth it, I have 0 sympathy for them.

    1. Amen!

      “I currently work at a company full oh PhDs who can write a mean white paper, but couldn’t actually make anything work to save their lives and are running the company into the ground.”

      Let me guess… I bet they are also wicked talented at back-stabbing each other and everyone in sight! Except for members of their tiny little clique. Constant inter-clique warfare. That is what I have seen in high tech, some of it fought by devout “Christians” too…

    2. You don’t need to go into debt to go to college. There are plenty of cheap options.

    3. Like I said above, it all depends. You can make 6 figures without going to college. I know plenty of people who do. Learn how to weld! Be a plumber. Heavy machinery operator. Etc.

      There are also lots of shit paying non college educated jobs. If money is your sole driver you can go either way. But doing something you want to do should matter too.

    4. I know several people who have done very well without a college education. They started out after high school and were able to advance in their jobs. All have pointed out to me that they could not have gotten their first job today without a college education. I don’t believe Bill Gates finished college and I am guessing that today he could not qualify for an entry level job at Microsoft. Part of the problem here is that companies at one time invested in their workers and advanced them. But that a cost that companies have tried to cut and many companies today expect you to come to them trained and ready to start.

      1. This is very true. Programmers nowadays are almost entirely college educated as far as getting in the door… But a ton of the badass programmers I know who are a little older, and got in before it was a requirement, are kind of grandfathered in because of their resumes. But some 20 year old kid won’t even get in the door. It’s such a dumb situation.

        One can ALMOST see it in some fields… But lots of fields where it is painfully obvious you shouldn’t need a degree do it now too for entry level positions.

        1. Part of that is the high schools are failing – and that there is a government department to interfere with reasonable hiring practices. Show me a recent high school diploma, and I don’t know if you can read, write, or do 4th grade arithmetic. Show me a bachelor’s degree and you are probably literate and have _basic_ arithmetic skills.

          It would make more sense to test applicants for the skills needed, but the Department of Labor will think that test is discriminatory solely because whites, blacks, and Hispanics aren’t equally likely to pass it. Before you can use a test, you’d better spend millions for test validation, and most likely the DoL will still tie you up in court for a decade. OTOH, they’ll accept without evidence that even the janitors need a bachelor degree, never mind that by the same statistics they use to reject testing, college is far more discriminatory.

          We’ve put liberals who got their jobs because they had a degree in charge of deciding whether everyone needs a degree…

          1. Can’t say I disagree with any of that. Those are all real problems, and real bullshit! The truth is, people aren’t all equal, and never will be. Trying to erect barriers to being able to properly sort the wheat from the chaff is ridiculous and will never succeed. There will always be XYZ people that succeed in ABC industries because they’re simply better. In some fields that will be men, in some cases women, in some cases Asians, and in some cases blacks… Because we have differences between us at the statistical level.

    5. There’s 2 problems at play.
      First is societal. We aren’t a meritocracy, we’re a credentialogy. On the government level, licenses and certifications are obviously that. At the job market level, formal education and certifications matter far more now than your track record or skill. There is some level of raise or bonus incentive for performance, but if you’re awesome and the guy next to you sucks, you’ll make 20% more if you have the same credentials and years of experience, not 3x as much.
      Second, like everything else the government touches, college has completely gone to shit. The fact that they secure almost all college loans has had a disastrous effect on tuition cost. And due to the strings attached to get dept of education money, colleges are now super bureaucratic and push an agenda hard.
      There are other routes to take. I agree with becoming a well paid tradesman whose skills are becoming increasingly rear. You can become a work for yourself entrepreneur, but that’s damn hard to be successful if you haven’t gotten any experience in your field first by working for someone else. You can get a bachelor’s for less by doing half of it at community college and than going to a state school (although that’s not cheaper really, the money to pay for it just comes from the state’s tax base).

  23. Could we please stop naming generations? It’s so gay.

    1. My generation got rooked… We were originally just going to be Gen Y, which is lame… But not nearly as lame as Millennial’s.

  24. If you take on debt you can’t pay back then, yes, it’s your fault. Each and every time.

  25. The oldest members of Generation Z are about 18/19 right now.

    Not 7/8.

  26. The reason they can’t pay back their loans is also a function of their unwillingness to compromise. They are only willing to accept a position in their field, that is personally fulfilling, and in their chosen geographic area. The idea of simply moving to Des Moines or Madison, or getting a job in a different field and getting some experience is inconceivable to them. They have no patience. In thier minds, it is their right to live in Brooklyn or San Francisco, if their pay cannot accommodate that then it must be supplemented. It is only fair. How dare you not allow them to live where they want and pursue their career of choice????

  27. CNN is the king of stories trying to drum up sympathy for people with student loans while picking the least sympathetic people. I’ve lost track of all the times they write about some doofus who borrowed over six figures to major in something that sets them up for a $30k/yr job.

  28. Not much sympathy for those that get into tons of debt for useless degrees. I’ve already spoke my mind in this thread elsewhere, but in short college can be worthwhile… Or not. You don’t need to go there if you’re just after money, there are lots of high paying jobs that don’t require college. But if the thing you WANT to do requires it, just look realistically at costs and your likely future income, and decide if it pencils out. It’s not that tough!

  29. How do these idiots get into so much debt? They think other people will pay for it later.

    My sister, who has a master’s in education, got $30,000 in student loans one year at NC. Tuition that year was not quite $10,000 but they were sure happy to loan her the excess money. What did my dumbass irresponsible sister do with other $20,000? Part of it paid for her Alaska cruise. The rest went to avoiding her getting a job to pay for school.

    Now she has to pay it back and she’s whining that “they” should pay it for her. Geez.

  30. “Are Millennials Responsible for Their Own Student Debt?”

    Talk about a stupid question.

  31. Should we feel bad for […] doctors?


    We want more of them, and the high up-front cost is part of the structural barriers stopping that. Re-workinging how we finance medical school is one of the many things we can do to help with our doctor shortage.

    Should we as a society be ready to forgive such mistakes […]


    Dicker about the mechanism for “forgiveness” if you must, but there is no reason to insist on treating student loan debt as uniquely un-dis-chargeable compared to other forms of debt.

    1. Default as ‘forgiveness’ should be available, but…
      1) it is not without negative results for the student defaulting. No credit for you, or at least it comes at higher interest rates
      2) Gets the lenders back with skin in the game. As long as the lender is 100% protected by the government for default, no lender has any incentive to vet the payback prospects
      3) be ready for the ‘disparate impact’ whining, when some majors are more valuable to lenders than others. People pursuing lower paying careers, especially grievance studies, social work, and education, are populated predominantly by women.

      1. Yep. Like I said, dickering about mechanism is fine. But there should be a mechanism besides “then die”.

      2. “Default as ‘forgiveness’ should be available, but…”
        Pay your debts.

    2. “Yes.
      We want more of them, and the high up-front cost is part of the structural barriers stopping that. Re-workinging how we finance medical school is one of the many things we can do to help with our doctor shortage.”
      Absolutely not. The government has no business deciding how many MDs we need.

      Dicker about the mechanism for “forgiveness” if you must, but there is no reason to insist on treating student loan debt as uniquely un-dis-chargeable compared to other forms of debt.”
      Absolutely not. There are very good reasons for that.
      Fuck off, slaver.

      1. Can you provide a good reason that student loan debt isn’t dischargable through bankruptcy but 100k in credit cards or 350k in a mortgage is?

      2. The government has no business deciding how many MDs we need.

        Which would fall under “re-working how we finance medical school”, and (per libertarian arm-chair analysis) lead to more doctors.

        So I’m not sure I understand your opposition.

        Fuck off, slaver.


        Being unable to discharge un-payable debt is the sort of thing that, for most of human history, led to actual slavery.

        Modern bankruptcy law is, in many ways, a big “fuck off, slaver”.

  32. Millennial here.

    Obviously, higher education is a joke, and the government should get out of the student loan business entirely. That’s the number one problem. It’s the reason why Boomers could pay tuition with a summer’s wages (LOL) and now that will barely cover your rip-off books.

    With that said, I would have never taken out substantial student loans, even for a top 10 law school, if the forgiveness provisions weren’t part of the contract I entered into.

    1. Tuition was a little more than a summer’s wage, but I get your point. Between my work and my parents’ willingness to help (they were both teachers, but they knew how to manage money) I graduated debt free. I’ve always lived below my means, although I have always owed money on something, usually a house. 2 of my 3 children also graduated debt free; they did it by working and not demanding to live in the most expensive apartments in town and driving old cars. Against my advice, my oldest son accumulated over $50 grand in student loans by the time he got his Master’s Degree. Today, at 39 he will tell anyone who asks that he was a complete idiot for borrowing all the money, much of which he spent on beer, quite a bit on a succession of terrible, broken women, and a little of it on tuition. He’s paying it back, every month, on time, without whining.

      1. No doubt. And there is an infinite supply of people dumb enough to keep the scam going. And if they borrow enough, and make little enough, they won’t necessarily have to pay it all back. That’s how stupid our federal government’s policy is right now.

        1. Stupid government’s gonna stupid!

  33. Normally, bankruptcy usually assumes there is something of value to be reclaimed by the creditors. With the accumulation of wealth, this model no longer applies.

    Or does it?

    I’ll agree to discharge the student loans of everyone that agrees to a lobotomy. That way the borrower doesn’t get to profit at someone else’s expense.

    FWIW, I paid my $61.58 for ten years starting in the late 70s, back when that was real money. Got a Masters and taught for almost 40 years. Political science, no less.

    You borrow it, you pay it back.

  34. I”m “fighting” for a debt-free future. Know how? I’m paying my own damn bills with money I earn and pay taxes on, that’s how. I owe less today than I’ve owed in decades, but every year that went by when I owed money was my own fault No one held a gun to my head and made me borrow money. A year from now everything will be paid off, just in time for Elizabeth Warren to start handing out $50 grand each to these whining, lazy little shits.

  35. If they aren’t, I’m curious to see who is responsible for their decisions. If I were betting, I’d put money on, “I make the choices. Someone else pays for the one’s that go bad.”

  36. OT, but somewhat related.
    How to fix ‘homelessness’ by huffpo:
    “Why America Can’t Solve Homelessness”
    “…But the biggest surprise about St. Vincent’s may be the state in which it’s located. Just four years ago, Utah was the poster child for a new approach to homelessness, a solution so simple you could sum it up in five words: Just give homeless people homes…”

    Yep, there’s the answer! Just have the taxpayers buy a home for everyone who can’t afford to live where they’d prefer!
    Why didn’t we think of that?
    Fucking lefty ignoramuses…

    1. I have a solution… We should take all of the nearly abandoned rural communities in various places, and send the hobos there. We can buy out the few useful residents and move them somewhere more desirable. We will build big fences around the towns so they can’t get out, and drop off a basic supply of food etc every week or whatever. They will have free homes that cost virtually nothing because they were basically abandoned already… And be out of everybody elses hair. They can bang heroin and shit on the sidewalks to their hearts content!

      1. You do realize you just described interment camps for people accused of no crime, yes?

        If you want to criminalize homelessness, you should just come out and say it.

        1. Oh, I totally think it should be illegal to be homeless. But the above is more of a REALLY big homeless shelter! That makes it progressive, don’t cha know! If they ever decide they want to stop being useless pieces of crap they can move out anytime and get a job like the rest of us. But if not… Well, gotta stay in the homeless shelter. We can send the proper crazy ones to asylums that we need to reopen.

  37. A similar story could be written about many of the subjects the major media outlets write about. They start with a dire premise i.e. ‘It’s impossible for a single mother to find an apartment in NYC’ and then pick subjects that ‘prove’ that theme. I’m always left asking “What happened to the father of your children?” or “Why did you quit your last job?”. The reporter either doesn’t ask or doesn’t include these salient facts in the article.
    It’s no wonder that people don’t trust the press.

    1. Yup. Not much mention in that article about all the people who went to college, worked while in college to minimize the debt, got a useful degree, and are paying their debt responsibly and moving along in life. Which would probably be a VERY sizable portion of people who went to college.

  38. Oh here we go.. What a tone deaf article

    And we wonder why young people aren’t Republicans?

  39. A major part of the problem as I see it is how the colleges and universities present student debt. Instead of treating a loan as a major responsibility that requires fiscal discipline, they present financial aid as free money. I have actually seen the words “don’t miss out on free money” in a college’s portal.

  40. There are several at fault here. The colleges and online schools do not have any employment counselors. They take no responsibility to provide potential employers for their programs. I’m referring to other than obvious majors of study.
    Then with the Federal Government allowing students to borrow COA, which each school dictates the ceiling. Students are not fruggle, they will go on spring break, party, buy excesses. Seriously, the brain isn’t done developing until 25 years old. The recent marijuana studies have confirmed.
    Obama delayed many from stepping out on their own into the world, with his healthcare till age 26 deal. They’re calling it delayed adolescence.
    I worked with 2 doctors. One owed very little student loan debt. He attended community college, then a state college then went to a good Medical School. He worked as a mover all through college. His plans after residency are to work with doctors without borders, which will satisfy his remaining debt.
    The other doctor, went Ivy League all the way. He claimed his debt was insurmountable and was grateful that his fiancee was rich.
    So choices matter, spending matters, school program accountability matters. But at some point, everyone must take responsibility for what you reap you sow.

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