“Student debt crisis” has become one of the most often heard phrases in America, but is there really a crisis? In this Pope Center piece, Jane Shaw examines a recent Brookings study in which the authors conclude that there is no crisis and some of the commentary by those who think (or at least want others to think) that we really do have a crisis.
I do not think we have a student debt crisis. We most assuredly do, however, have a serious resource misallocation problem which evidences itself in the fact that a very larger number of college grads (and dropouts) have borrowed a lot of money to little or no purpose. Just as the “crisis” in home foreclosures several years ago was just the manifestation of policies that had created an unsustainable bubble in housing and thereby misallocating lots of land, labor, and capital, so too with college. To focus on the debt problems that many face is to miss the underlying trouble: college costs too much, educates too little, and many young people enroll just because they want a piece of paper.