The New York Federal Reserve released some interesting numbers recently. Of the numbers the one I found most interesting was the amount of outstanding student debt in this country:
Over the last eight years, aggregate educational debt outstanding has almost tripled, rising to nearly $1 trillion and becoming the largest consumer liability after mortgages. Was this dramatic increase attributable to more borrowers, or more debt per borrower? Both, as it turns out, in almost equal measure: The number of student loan borrowers and the amount each borrower owes have both risen 70 percent since 2004.
$1 trillion of student debt? Oi. This got me thinking about a book I read several years ago title Confessions of an Economic Hitman. The premise of the book is that the United States sends economic hitmen to developing nations. Loans are promises to the governments of those countries for major infrastructure projects. The catch is the loans are written to look reasonable but designed in such a way that the country is never able to pay it back. When a country accepts one of these loans they are forever indebted to the United States, which will come back later and demand raw materials or land in exchange for outstanding debt.
Students loans have some similarities to economic hitman loans. While student loans appear to be reasonable on the surface they are often so high that many college students can’t afford to pay them back. Instead they’re stuck paying the interest for the remainder of their lives. The state could effectively tax an entire population of students twice: once in the forms of income, sales, use, etc. taxes and once in the form of interest on outstanding debt. I’m beginning to wonder if the whole purpose behind student loans is to create an entire generation of debt slaves. There’s no way the United States government set up a system that hands out $1 trillion to students out of the goodness of its heart (since it has neither goodness or a heart).