Student Loans Are Set Up to Screw Students

One fundamental reason the nation's student debt problem is so awful is that these loans "aren't loans, at least in the traditional sense," writes David Dayen at Salon. Thanks to misguided laws, they can't be refinanced and the debt can't be shed through bankruptcy. To make matters worse, the government uses an "army of private debt collectors" to harass student borrowers without relief. "How do we quit loading up 18-year-olds with a risky gamble that could impact the rest of their lives?" Some interesting proposals are out there, including one to refinance student loans at 4% and another that would link the amount students have to pay back to their income.

"Ultimately, keeping college affordable is the answer," writes Dayen, and Katrina vanden Heuvel at the Washington Post hits on a similar theme today. "This isn’t complicated," she writes. "Washington should be moving boldly to make advanced education affordable for all. The federal government should be increasing grants to states for public colleges, on the condition that the states increase their own contributions and act to curb college costs." Cracking down on shady for-profit colleges also would help. Plenty can be done, and vanden Heuvel writes that she hopes "student loans may be to this generation what the draft was to the boomers—the government folly that afflicts them personally and rouses them to act." Click for her full column, or for Dayen's full column. (More student debt stories.)