DC Took Over Student Loans. Tuition Never Stopped Climbing.
Fifteen years ago, Washington made a promise. Hand the government full control of student loans, they said, and college would get cheaper.
Today that promise looks like one of the worst bets Uncle Sam ever made, and millions of families are stuck paying for it.
New numbers out this week show student loan defaults have hit a record high. About 9.5 million borrowers are now in default, meaning they're more than nine months behind on payments.
That's roughly one in every five people who owe money on a federal student loan.
Another 3 million borrowers are close behind, and experts warn the total could top 12 million by the end of this year.
All together, that's $233 billion in loans nobody is paying back.
This didn't happen by accident. It's the direct result of a decision Democrats made back in 2010.
Back then, President Obama pushed a law through Congress that ended the old system where private banks made student loans with a government guarantee.
Starting July 1, 2010, the federal government became the only lender. No more banks, no more competition, just Uncle Sam handing out the cash.
The Congressional Budget Office promised it would save taxpayers $62 billion over ten years. Sounds great on paper.
Here's what actually happened. Once colleges knew the federal spigot would never run dry, they had no reason to hold the line on price.
Researchers who studied the years after the takeover found tuition climbed roughly 55 to 65 cents for every extra dollar the government pumped into loans and Pell Grants.
In other words, the more “help” Washington sent, the more colleges charged. Total student debt more than doubled, growing from $811 billion in 2010 to $1.7 trillion just over a decade later.
Meanwhile, plenty of universities have been sitting on endowments worth billions, invested like hedge funds, while middle class families take on loans they can't pay back.
Some lawmakers now say it's time to look hard at whether these schools deserve their tax-free status if they're going to gouge the very students that “free” federal money was supposed to help.
Nevada families are feeling this squeeze right along with everybody else. The Silver State ranks among the states with the highest default rates in the country.
Nevada borrowers currently in default owe more than $2 billion, and that number has jumped by $886 million since just last September.
That's real money owed by real Nevadans who trusted a government program that was sold as a way to make college more affordable.
Defenders of the 2010 takeover argue the old bank-based system had its own problems, and that's a fair point worth acknowledging.
Banks weren't perfect either. But the promise made in 2010 wasn't “we'll swap one flawed system for another.” It was that a government monopoly would lower costs and protect students.
Instead we got higher tuition, deeper debt, and now a default crisis breaking records. This is what happens when government decides it knows better than the market.
Take away competition, hand out money with no strings attached, and watch prices soar while the bill lands on regular families, not the bureaucrats who wrote the rules.
Nevada students and parents deserve a system built on accountability, not one where Washington prints the checks and colleges cash in. Until that changes, don't expect this default crisis to be the last one.
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