Return on investment

Should Students Borrow?

As summer ends, 17 million students head to college. Nearly 40 percent are borrowing to do it. Over the past 15 years, the number of people with student loans nearly doubled and now stands at roughly 45 million―that’s about one in four adult Americans. Furthermore, the amount of debt has virtually tripled to just over $1.5 trillion, so the average loan is something like $35,000. Politicians, reporters, and researchers characterize this as a crisis. Is it?

Our answer is yes. While the majority of those with student loans are able to handle them, a large fraction cannot. Despite the strong labor market, nearly 7 million people, or more than 15 percent, are over 90 days late on payments or in outright default (see here). Since virtually all of this debt comes through federal programs, the government has created the problem. What should policymakers do about it?

Read More