The student debt crisis

Articles like this one in the New York Times really frustrate me. It's entitled "Private Loans Deepen a Crisis is Student Debt" and it details the rise of private loans that students receive to pay for college. Here are the first two paragraphs:

As the first in her immigrant family to attend college, Lucia DiPoi said she had few clues about financing her college education. So when financial aid and low-interest government loans did not stretch far enough, Ms. DiPoi applied for $49,000 in private loans, too. “How bad could it be?” she recalls thinking.

When Ms. DiPoi graduated from Tufts University in Boston, she found out. With interest, her private loans had reached $65,000 and she owed an additional $19,000 in federal loans. Her monthly tab is $900, with interest rates topping 13 percent on the private loans.

There's also a picture of Ms. Dipoi with her Apple Macbook and a stack of books, among which are War and Peace and Islam: The Straight Path.

The article also profiles a student of the California College of San Diego who is carrying $46,000 in debt, "which she fears may rise beyond her ability to pay."

Now, I do feel for people who get involved in too much debt, and if lenders lie or misrepresent the terms of the loans that is a problem. But, what frustrates me about articles of this type is the overall sense that it's somehow someone else's fault that these students got into so much debt. As the article says:

“It’s a huge problem,” said Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers. “When a student signs the paper for these loans, they are basically signing an indenture,” Mr. Nassirian said. “We’re indebting these kids for life.”

I like the use of the royal we there. Who's fault does Mr. Nassirian think it is when someone doesn't know what "prime plus 6% means" or if a borrower thinks that it makes economic sense to borrow $84,000 (the $65,000 in private loans plus $19,000 in federal loans) for an undergraduate education? The article fails to note the degrees that these students received, but I can almost guarantee you the degrees were not in the sciences, engineering, computer science, health care, math, statistics, business or economics. You can recoup an investment (which is what college is) in an undergraduate education with a degree in one of those fields. However, not all jobs will allow a person to pay off $84,000 in debt.

It's not just the degree choice that's important. Where you attend school is important too, which is another thing the article fails to mention. I would have liked to attend Yale instead of the University of Washington. Putting aside that I probably wouldn't have gotten into Yale, the UW also costs about 1/10th of what Yale costs. I performed a rudimentary cost benefit analysis of attending Yale versus attending the UW and decided that the UW was a better choice and didn't even bother applying to Yale. Is it too much to ask prospective students to consider the future implications (financial and otherwise) of their choices? The UW is a fine institution, a real bargain if you ask me. So are many other state schools. Which is better, a Tufts degree and $84,000 in debt or a University of Massachusetts degree and a lot less debt? I can imagine how Ms. DiPoi would answer that question.

Like I said, loan terms should be truthful, clear and involve no hidden costs, extra fees, etc. If they're not, then that's a problem. But if the problem is students are taking out loans to attend private colleges for degrees that have dubious financial rewards, well, I just don't see how that is a problem that we need to fix.