The bursting of the bubble in student loans may be closer than we think, now that the New York Times has discovered it. In an impressive (but ultimately incomplete) article, “Your Money” columnist Ron Lieber tries to figure out how a New York University graduate racked up $97,000 in loans that, given her job prospects, she may never be able to pay off.
The author tries to assess blame and finds several targets — the young woman’s mother, who admits that she was naïve; Citibank, which lent money even though the student was already deeply in debt; and New York University, which knew about her debt but gave her no warning that this might pose problems. (He blames NYU the most.)
Left out is the nature of the loans themselves: the government subsidies, which shift costs onto taxpayers and spur lenders to offer easy credit; the fact that the loans come in the form of a check that can be used for any purpose; the excessive amounts that the government tells students they “need”; and students’ protection from having to pay a cent until they are out of school.
In 2008, Jenna Ashley Robinson of the Pope Center, exposed student loans for the scam they are, using her own experience as Exhibit A. To quote a couple of lines:
So my classmates and I spent our college-loan money getting the ultimate college experience. We wanted it all: Greek life, study abroad, the newest, coolest flip-flops, Dave Matthews Band concerts, and off-campus apartments. And we got it.