The Debt Trap: How Student Loans Became a National Catastrophe

Today, 43 million Americans owe $1.6 trillion in student debt, an amount that has tripled since 2006 and exceeds what they owe in credit card debt and car loans. Student loans have enabled schools to raise tuition faster than family incomes. Average tuition,, room and board at four-year private colleges has risen nearly 800% since 1980, more than 5X the rate of inflation. Today, a four-year degree at a private college costs nearly $200,000 on average, before discounts, $100,000 at a public college. At USC's dental school, tuition, room and board costs $152,000 for the first year.

Families are given a blank check, allowing them to enroll their children anywhere, colleges have abused their pricing power. A million borrowers owe over $200,000, at least a hundred owe over $1 million. Eight million are in default, not far from the number losing their homes during the housing crunch. Black borrowers are more than 3X as likely to default as white students. 

Half of all borrowers are over 35, and a fifth are over 50. Over the past decade, hundreds of thousands have had their Social Security checks reduced to help repay their student loan debts. Of the $1.6 trillion in student debt, taxpayers are likely to pay back about a third. That's almost the amount of subprime mortgage debt private lenders wrote off after the housing crash and 7X what is spent on food stamps each year.

Universities employ more lobbyists than any other industry except pharmaceuticals and technology; they have fended off attempts at regulation that would have prevented many borrowers from getting into financial trouble. Eighty-one university leaders, including 17 at public colleges, earned over $1 million in 2019.

If you’ve ever thought about our country’s student loan crisis and wonders how we possibly got here, this book leaves no question unanswered.

Every institution - from Congress, to Sallie Mae, to Wall Street, to the schools themselves - bares part of the blame, and they laid it on the backs of America’s youth, with the promise of a brighter future. It’s predatory and no better than most MLMs. Both political parties bare blame as well.

The best part of this well researched history and current state of the industry book is it actually ends with solid, well thought out solutions. I hope Congress and the Department of Education read it.

How did student loans which is a grand experiment on social mobility get so messed up? Read this book. The author digs into the history of student loans and on the first CD of the audiobook gives a clearly understandable tutorial on how student loans started. The entire audiobook is like a great college class on student loans and they became riddled with difficulties.