In both Canada and the United States, proposals are being floated to deal with the problem of student debt. Paul Krugman writes:
What I think I do know is that much of the backlash to proposals for student debt relief is based on a false premise: the belief that Americans who have gone to college are, in general, members of the economic elite.
The falsity of this proposition is obvious for those who were exploited by predatory for-profit institutions that encouraged them to go into debt to get more or less worthless credentials. The same applies to those who took on educational debt but never managed to get a degree — not a small group. In fact, around 40 percent of student loan borrowers never finish their education.
But even among those who make it through, a college degree is hardly a guarantee of economic success. And I’m not sure how widely that reality is understood.
What is widely understood is that America has become a far more unequal society over the past 40 years or so. The nature of rising inequality, however, isn’t as broadly known. I keep encountering seemingly well-informed people who believe that we’re mainly looking at a widening gap between the college-educated and everyone else.
When governments stopped issuing grants to students and started providing loans to them, the assumption was that their lifetime earnings would far outpace their debt. They could, it was said, easily repay their loans.
But the economy changed. University students graduated into the gig economy, where a regular paycheque was far from guaranteed. The result has been that students graduate from university with the equivalent of a home mortgage on their backs. That's quite an achievement by the age of 22. Recent statistics indicate that newly graduated doctors owe a quarter of a million dollars as they begin to set up a practice.
In Canada -- for the past two years and until March 2023 -- the federal government has stopped including interest payments on that debt. But there is so much more that could be done.
Image: North Shore Community College