I was born the when Sputnik went up and the space race between the USA and Soviet Union began. Dwight Eisenhower was president, a time when worldwide nuclear testing was growing exponentially. The General knew the risks to the country, and the solution to this future threat. This is when the Federal student loan program was instituted. Since the need was great for STEM skills the loans were proposed as scholarships but during Congressional debate the appearance of a “free ride” was turned them into a loans as part of the National Defense Education Act.
This federal program was popular and grew and combined into the Higher Education Act of 1965. It was amended in 1976 to where Federal student loans became non-dischargeable in bankruptcy proceedings.
The 1960 and 70’s the Vietnam war, burning draft cards, bone spurs, and the college exemption. Did some in Congress want to punish a few who took the loans and the went bankrupt in the hopes of not serving in Vietnam. Irregardless it created a new better grade of loan. What did that little change do?
If I am making loans I am encouraged to make loans with the best chance of being paid back. Student loans now have this legal benefit so I am encourage to make more of these type of loans.
If I am in college management I am encouraged to expand and help to get more of the anticipated loans.
If I am a student I am looking forward to the future; I am not looking to fail. But maybe I should.
Over the Sixty years the loans, that should have been focused scholarships, has done what it suppose to do in making USA the STEM education juggernaut it is now. Also over years predatory lenders marketed easy money for college; more people went to college on loans. Going to college is not a guarantee to succeed; at percentage will fail and the loans with them. More total loans, more total students, more total student loans failures and the total student defaulted debt grows. Over the years the program that has worked so well for our country needs for technology education has become a metastasizing cancer on our economy and society.
How to fix this complex problem. Is shaming borrowers, Is making colleges guarantee that they can make you successful in any career you choose, Both are feel good fantasies that fix nothing. I have some ideas that won’t be feel good. First make, student loan dischargeable in bankruptcy like credit cards; the courts are suppose to look at individual circumstances and come up with even-handed solutions. Second get rid of future loans and return to the original scholarships and target them to what society needs in the next generation including trades. Next, buy back student loans debt from collection agencies near their cost. Also, offer one for one public service repayment: For example, four years of schools followed by four years public service and the loan is forgiven. Lastly, eliminate the some of the need. The amount of stuff children need to learn to stay current with today’s world has increased substantially since the K-12 public school model and that has increased the need for some secondary education, If we instituted a K-14 public school model, there would be less of a demand for a costly loan backed education. None of this is cheap, fast or completely equatable.
Fun Fact from Wikipedia “The 1959 Disney featurette Donald in Mathmagic Land was produced and distributed with NDEA funding.”
