If We Only Fix 15%, It's Still 85% Broken
Talk about really missing the forest for the trees (or finding the speck in your neighbor’s eye while ignoring the plank in your own, or whatever metaphor one prefers), but this story by Michael Stratford for the Chronicle ended with a rather deft counter to the recent hand-wringing by the Consumer Finance Protection Bureau (CFPB) on private student loans. As the story describes, the CFPB has issued, over the past year, multiple reports on the dangers and shortfalls of the private student loan industry. But as Stratford dryly notes at the very end of his story,
Private loans represent only a fraction of the overall market for student loans, accounting for about $150-billion of the more than $1-trillion in outstanding student debt. The vast majority of student loans are held by the government.
It goes without saying that one can list legitimate grievances against the private loan
industry, but it is somewhat amusing to see the CFPB
spill so much ink over was is, in reality, only a very narrow segment of the student loan market. Sure, I suppose it is true that we have to start somewhere to fix the student loan system, but ignoring the elephant in the room really won’t serve students or taxpayers well in the long run. Besides, if all we do is just shift the loans from private holders to the public, might not that put taxpayers at a higher level of future risk than they have already? If anything, rather than just a 15% fix, shouldn’t we focus on how to retool the whole system?