Calling the situation an “outrage,” President Obama announced on Monday that the student-debt burden is too high, and he proposed new regulations that would cap payments on older loans at 10 percent of income.
In the same speech, the president called higher education “the single best investment that you can make in yourselves and your future,” and later referred to it twice as “a smart investment.” But how that can be true if students are now drowning in debt?
Perhaps the debt problem is exaggerated, as most “outrages” in politics tend to be. But it’s another indication that the college-for-all mentality is not a harmless fantasy — real damage can occur, in the form of financial distress, when young people are encouraged to pursue higher education that doesn’t fit their abilities and interests.
The president’s actions implicitly acknowledge that college has not been a good investment for many people. Federal student loans are already subsidized with billions of taxpayer dollars every year. In addition to proposing new regulations, the president also endorsed Senator Elizabeth Warren’s bill that would allow students to refinance their federal loans at lower rates, at a cost of an additional $58 billion over ten years. If college is such a great deal, why are all of these new subsidies necessary?