Helping students understand how to effectively manage student loan debt is a bit of a project for me. I spend much of my professional work counseling first-generation college students, most of whom have high financial need. I have shared my views on the student debt crisis here, here, and here.
Andrew Hacker and Claudia Dreifus present some excellent alternative plans for lowering student costs in higher education by encouraging students to choose community colleges and state institutions. And although I disagree with their portrayal of unscrupulous financial aid officers when describing the individuals at my own institution, I do not doubt that they are out there.
The next subprime crisis will come from defaults on student debts, starting with for-profit colleges and rising to the Ivy League. The parallels with housing are striking. In both, the written warnings aren’t understood, especially on penalties and interest rates. And in both, it’s assumed that what’s being bought will rise in value, in one case the real estate, in the other the salaries which will accrue with a degree. One bubble has burst; the second is already losing air.