My conclusion is this: the salient fact on this issue is that student loans cannot be defaulted on, by law. This is the one thing that has made an enormous difference. The analogy with the housing bubble is strong, but not exact.
The problem in the 2008 bubble was not so much the Community Refinancing Act, which mandated risky loans to people with little credit history. The problem was that all of the securities issued by Wall Street had the backing of Fannie Mae and Freddie Mac, meaning effectively that if for some reason the loans were not repaid, the Federal Government would step in to take care of it, AS INDEED IT HAS, costing hundreds of billions of dollars. This created the manifest moral hazard that profits were privatized, and risks passed on to saps, in this case the American people, who in general still do not understand what happened.
With regard to student loans, authorized agencies like Sallie Mae could make loans to ANYONE, regardless of credit history (and 18 year olds don’t of course normally have a credit history), and in nearly any amount, because they KNEW that, legally, that loan would be repaid, even if it took 30 years to do so. You can’t discharge student loans in bankruptcies. You can’t walk away from them the way you can a house.
This, in turn, enabled massive cost increases by the universities, who–like all bureaucracies–exist principally to expand. In this regard, they might be profitably compared to cancers. Untreated, cancers will nearly always grow until they kill the host, here, the American people. Given the cultural presupposition that you need a college degree, they were able to count on economically ignorant young people taking on more and more debt, with little to no net increase in BENEFIT to them.
The whole thing is really quite cynical. University Administrators make very good money, yet deliver very little of value to their students, and by extension to the American economy and people. Yes, engineers are helpful, but they are number eight in the top ten of college degrees. Look at this: http://www.collegespot.com/top-10-lists/top-10-most-common-college-degrees/
I count only four degrees that are in useful fields: Biology, Computer Science, Engineering, and Nursing. The rest of them are throwaway. I don’t count business degrees for the simple reason that I have been in business myself for some time, and in my experienced view there is no substitute for just doing the job. As a general rule, the top salespeople in non-technical fields don’t have college degrees at all. My two former brothers-in-law are both way into six figures, and neither even did well in high school; yet, both know WAY more than even a graduate of the best business program in the country. In fact, much of what seems to be taught in business school is short term profit at the expense of long term value. This is bullshit. Nobody in business for themselves thinks like that. Graduates of such programs get hired on by large corporations, and move on before the consequences of their policies really hit.
With regard to psychology, political science, history, philosophy, literature, and the like, I have learned way more since I left college than I ever learned there.
Bottom line: the government, once again, has been used by Socialists to support a very simple goal: getting more people into indoctrination factories, and increasing the relative power and money of those factories in such a way as to build support for leftwing policies.
Again, Fannie Mae was intended as a means of distrupting the private market in housing, and for facilitating a government take-over of the housing sector. Between them, Fannie Mae and Freddie Mac hold the mortgages to some 2/3rds of American homes. Consider that. Ponder that. If it had been called a housing takeover people would have been up in arms. Call it “making housing affordable”, and you are a big fat meany head if you oppose it.
There is no point in denying that leftists lie well. Generally they lie both to themselves and everyone else. But not all. Some are power-mongering sons of bitches, who in a just world would be readily recognized for what they are and reviled. But we do not live in a lucid, much less just world. We live in an Alice in Wonderland world, carefully crafted by the sadists among us, and very few people seem able to navigate it.