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In defense of student loans

Everyone should have the opportunity to go to college, but fairness demands that students themselves – not taxpayers collectively – pay their way.

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As college graduates leave the comforts of campus for the toughest job market in a generation, the press is once again filled with the annual, obligatory sob stories of how much debt they must now bear.

On average, bachelor's degrees come with a $23,000 debt load. Recipients of master's and doctorate degrees will, on average, have amassed $33,000 and $54,000 (respectively) in debt, while newly minted doctors and lawyers will have average debt loads of $130,000 and $82,000.

Those are hefty sums, but let's not shed too many tears. Any investment requires up-front sacrifice, and according to the College Board, the rewards to a higher education are substantial. Over their lifetimes, the median earnings of individuals with bachelor's degrees are more than 60 percent higher than those with only a high school diploma.

Earnings of doctors and lawyers are nearly three times as high. According to the board, such high wages allow most graduates to quickly repay their loans. It's no surprise that students borrow to finance a college education.

Indeed it's not what people pay for their college education that is the real scandal – it's what they don't pay. Most American college students attend public institutions where tuition and fees typically cover less than half of the operating costs. Moreover, students at both public and private schools frequently receive generous government grants. As for those much-maligned student loans, the interest payments on them are often heavily subsidized.

Higher education subsidies are paid for with tax dollars collected in part from people who didn't go to college. This has created a scandalous situation where low- and moderate-income individuals with no college are forced to subsidize the process that helps others have high incomes.

That deprives them of resources they could use to make similar investments in themselves. Imagine the frustration of a mechanic who can't buy the latest tool that will boost his productivity and raise his wage because he is forced to subsidize someone else's pursuit of an MBA.

These unfair policies are sold as helping people move up but they unwittingly exacerbate income inequality, an issue that President Obama professes to be greatly concerned about. Yet the centerpieces of his higher education plan are boosting the American Opportunity Tax Credit and increasing college grants. These policies will only shift more college costs to those who did not attend college.


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