The current student loan system encourages debt

Imagine a state government with the worst credit rating in the country borrowing money to pay off the personal debts of individuals with six-figure incomes buying homes that cost up to $500,000.

Two years ago, Illinois lawmakers passed the $45 billion Rebuild Illinois Capital Plan. It was a bipartisan proposal negotiated behind closed doors and designed to pay for the repair of highways, the construction of bridges and the construction of public buildings. But the plan also included $25 million to forgive student loan debt.

The SmartBuy program pays off up to $40,000 in student loans if the debtor buys a home in Illinois and keeps it for three years. Another $5,000 is available as an interest-free loan for a down payment or closing costs.

Student loan forgiveness sounds magnanimous until you realize that it really means people who didn’t go to college or have already paid for college will end up footing someone’s college bill. another.

“Last time I checked, two-thirds of Americans don’t have a license. It’s not fair to expect them to pay for the college education of those who are better educated and often better off than them,” said Lindsey Burke, director of education policy at the Heritage Foundation.

If you think the Illinois program targets unlucky cases struggling to survive under crippling debt, think again.

People earning $109,200 a year are eligible for loan forgiveness.

That’s 65% higher than the median household income in Illinois of just under $66,000.

The program is expected to repay the debts of around 1,000 people. But former state representative Jeanne Ives notes that about 2 million in Illinois have outstanding student loans.

That means the other 1.99 million Illinois taxpayers with student loan debt aren’t just paying for their own college education, but someone else’s.

It’s not fair to them or to the students who worked in college, got scholarships, joined the military, chose cheaper schools, or whose parents sacrificed to send them.

I contacted Kristin Faust, executive director of the Illinois Housing Development Authority, which administers the SmartBuy program. But neither she nor her staff immediately responded.

Let me acknowledge that a ridiculous amount of debt is incurred to pay for college.

But who are the bad guys in this mix? Well, college administrators.

The United States Bureau of Labor Statistics reports that, on average, the price of tuition has increased by 31% over the past decade.

But this is not the case in all schools.

For example, Purdue University has not raised its tuition for 10 years. Not only have tuition fees remained stable, but room and board rates have dropped over this period, from the second highest in the Big Ten to the most affordable.

But most university presidents did not follow the Boilermakers’ lead,

After all, students can borrow and pay whatever the schools charge. Thus, colleges maximize their income by putting more into debt those they are supposed to serve.

And colleges are using a lot of that money to create more administrative positions. Since 2001, administrative positions on college campuses have grown at a rate 50% faster than teaching positions, Burke said.

“It’s also important to remember that colleges compete with each other to recruit students. They feel the need to add more frills and amenities like climbing walls, lazy rivers, and nicer buildings. And it also increases costs,” added Neal McCluskey, education policy analyst at the Cato Institute.

Our current student loan system is like giving credit cards to 18-year-olds and telling them to charge what they want and figure out how to pay later.

And until this blank check mindset is resolved, our young people will go deeper and deeper into debt.

Scott Reeder is a veteran State House reporter. Contact him at [email protected]