No one told the aspiring teacher to look before borrowing

One of the worse unintended consequences of good intentions in government is the way Washington has eagerly helped young Americans accumulate huge piles of student debt. Americans now owe $1.1 trillion – that’s more than a million times a million – for what they borrowed to attend college.

For decades, the federal government guaranteed and subsidized these loans, making it that much easier to borrow. Since 2010, the federal government has simply run most student lending, so this mess is Washington’s handiwork.

You can see the result in the testimony of a young woman, Brittany Jones, who wanted to be a schoolteacher. It’s honorable work that pays reasonably well, but it is not known for paying high salaries right out of college. Jones went to a four-year state college and graduated with “well over $70,000” in student debt, she told the Budget Committee on Wednesday. I asked her whether any high school or college counselors ever went through the calculation of how much debt was appropriate and whether she would be able to repay it, based on the profession she was planning.

She answered:

“They did not. Actually, when we started the conversations about college, they simply, you know, let us know you can apply for millions of dollars in scholarships and grants. They're available, you just have to apply for them. And you can talk to your financial-aid counselor about the other options for paying for college.”

Did her conversation with that counselor ever touch upon the ability to repay?

“Not in the initial stages. They simply were saying you have this much of a balance, you can pay with it using this financial-aid package of your subsidized or unsubsidized loan. And you can take them if you want, or you can borrow from your family.”

I was lucky. I had a finance professor in college who took the time to warn students about personal debt. It was a much more helpful message than simply being told how to borrow more. I also had the advantage of going to college in the 1970s, when college was a lot cheaper – so much that you could pay your costs by working. A few remarkable colleges still make that possible, but what caused student debt to double since 2007 is that the cost of attending college has risen relentlessly and faster than inflation. For example, an average year at a four-year public college cost $929 in 1963. Had the price just risen with the rate of inflation, it would now cost $7,045. Instead, it averages $17,474.

college costs graph

This rise has occurred simultaneously with a massive federal infusion of federal student aid – about $2 trillion since the late 1960s. The average price has risen $5,535 just since 2001, the year that federal spending on Pell Grants began rising swiftly. That enormous amount of student aid was meant to make college more affordable. It’s fair to ask whether it had the unintended and exactly opposite effect.