Will taxpayers be left holding the bag for student-loan deadbeats?
The New York Post Editorial Board
Taxpayers who got socked by the 2008 housing crash may soon have to pony up again — for student-loan deadbeats.
Some 43 percent of Americans with government student debt are behind or not making payments at all, The Wall Street Journal reports. That could leave taxpayers holding the bag — to the tune of more than $200 billion.
Will Washington never learn?
The feds are rightly worried about defaults and unpaid bills — not just because of the hit on taxpayers but also the damage to borrowers’ own credit. They’re stepping up efforts to reach out to delinquents and offer easier payment plans.
But that’s not likely to ease the crisis. Loan servicer Navient says it already sends out 230 to 300 letters, e-mails or texts, on average, in the year leading up to a default. Nine out of 10 borrowers never respond; more than half make no payments.
Attempts to garnish wages and tax refunds offer more promise. But rather than try to recover money after the fact, why not avoid bad risks from the start?
Today, government loans often come with virtually no credit checks and require no co-signers. There’s not even an attempt to figure out if a borrower is ready for college-level work.
“On what planet does a financing vehicle with those kinds of terms . . . make sense?” asks higher-ed economist Carlo Salerno.
Sound familiar? It should: After the housing crash, everyone asked similar questions about the easy mortgages that had been given to poor-credit homeowners.
And these days, lending to high-risk students is even more dubious, given increasing evidence that for some people college just isn’t worth the cost.
Meanwhile, Hillary Clinton and Bernie Sanders would both make things worse: She’d sock Americans with a $35 billion-a-year tab to aid students; he’d shell out at least $75 billion — to make college “free.”
Great idea: Not only would taxpayers suffer; so, too, would those lured to college even when they may be wasting their time.
April 11, 2016
Taxpayers who got socked by the 2008 housing crash may soon have to pony up again — for student-loan deadbeats.
Some 43 percent of Americans with government student debt are behind or not making payments at all, The Wall Street Journal reports. That could leave taxpayers holding the bag — to the tune of more than $200 billion.
Will Washington never learn?
The feds are rightly worried about defaults and unpaid bills — not just because of the hit on taxpayers but also the damage to borrowers’ own credit. They’re stepping up efforts to reach out to delinquents and offer easier payment plans.
But that’s not likely to ease the crisis. Loan servicer Navient says it already sends out 230 to 300 letters, e-mails or texts, on average, in the year leading up to a default. Nine out of 10 borrowers never respond; more than half make no payments.
Attempts to garnish wages and tax refunds offer more promise. But rather than try to recover money after the fact, why not avoid bad risks from the start?
Today, government loans often come with virtually no credit checks and require no co-signers. There’s not even an attempt to figure out if a borrower is ready for college-level work.
“On what planet does a financing vehicle with those kinds of terms . . . make sense?” asks higher-ed economist Carlo Salerno.
Sound familiar? It should: After the housing crash, everyone asked similar questions about the easy mortgages that had been given to poor-credit homeowners.
And these days, lending to high-risk students is even more dubious, given increasing evidence that for some people college just isn’t worth the cost.
Meanwhile, Hillary Clinton and Bernie Sanders would both make things worse: She’d sock Americans with a $35 billion-a-year tab to aid students; he’d shell out at least $75 billion — to make college “free.”
Great idea: Not only would taxpayers suffer; so, too, would those lured to college even when they may be wasting their time.
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