The government is now essentially in charge of the student loan market, and that’s not working out so well, The Wall Street Journal
says in a Friday editorial.
Thanks to a provision passed along with health-care reform in 2010, the Department of Education became the originator of roughly 90 percent of U.S. student loans.
The results aren’t pretty, the paper points out. A whopping 35 percent of student-loan borrowers under 30 were at least 90 days late on their payments at the end of last year, up from 26 percent in 2008 and 21 percent in 2004.
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As college graduates “mature and enter the labor market, they are learning how difficult it is to find a job that allows them to repay those loans,” Journal editors write. “And for those who can’t, the tab is likely to be pushed onto taxpayers.”
President Barack Obama has helped create laws that allow students to shirk their debts, the editorial says. “‘Income-based repayment’ plans and eventual debt forgiveness for people who take jobs in government and the nonprofit sector have enabled more youngsters to avoid paying on time.”
Student loans represent one of the few areas of consumer debt that’s not shrinking, the editorial states. “All of this was predicted by those who opposed the federal takeover of student loans. But as with so many promises that government makes, the fun comes early and the bill arrives later and is paid by someone else.”
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