The Debt Trap

June 15, 2021
Thoroughgoing report on the student-loan crisis. Wall Street Journal writer Mitchell writes that student debt in this country "is the size of Canada's economy," amounting to $1.6 trillion. That debt is coupled with crippling terms that burden many borrowers with payments that will last throughout their working lives, mostly to service interest, and higher education has not delivered jobs that pay enough to cover them. Indeed, "far from making college affordable, student debt enabled schools to raise their prices in perpetuity, creating a higher education industrial complex that has driven up the price of college--and graduate school--to unprecedented levels." It's a vicious chicken-and-egg situation: Student loans are easily obtainable, so easy that many workers in stressful economic times return to school simply to qualify to take out loans to survive; because the money is so abundant, schools, underfunded in the case of most public institutions, feel no restraint to curb their costs. Mitchell tells the story of one woman who married a man who took advantage of her financially, then returned to school in order to better her job prospects and wound up owing a huge debt. She was one of the few to be allowed to discharge her debt legally, but only because a collection agent sympathized with her as she battled cancer. Such circumstances of emergency were not in the design of the loan program, which dates to the administration of Lyndon Johnson. As its founder told the author, "we unleashed a monster." It's a monster indeed, and no president since has done anything to tame it. Mitchell notes that under the Obama presidency, "Black families got into debt more than families of any other racial or ethnic group." This urgent report makes a convincing case for reforming the loan program to allow students "a fair shot at college, at a reasonable price." An alarming study of an economic crisis long in the making--and entirely avoidable.

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Starred review from June 1, 2021
The news is full of stories about the student loan debt crisis, but how did it all start? Wall Street Journal reporter Mitchell digs into the history and drives all the way to the current state that has Americans owing $1.5 trillion in student loan debt. It began when the Soviets launched Sputnik and Congress felt that American students were falling behind in scientific innovation and so created the first federal student loan programs. Without much oversight, this industry went from trying to help poor and middle-class students get an education to making money. Mitchell follows lending groups, such as Sallie Mae, that wooed financial aid directors to increase loan numbers and lobbied to remove bankruptcy protection for borrowers. Also, the rise in financial aid meant that schools could increase tuition while encouraging students to borrow more. Mitchell uses several student stories to illustrate these points and show the effects on society. The book is sure to garner attention, as well as make readers take a close look at the cost of higher education. Parents, students, and educators will find it enthralling and possibly be moved to push for industry reforms.

COPYRIGHT(2021) Booklist, ALL RIGHTS RESERVED.

June 28, 2021
The $1.6 trillion Americans owe in student loans is greater than the size of the Canadian economy, notes Wall Street Journal reporter Mitchell in this meticulous, eye-opening history of the student debt crisis. Though the G.I. Bill effectively paid for mass higher education in the years after WWII, Congress rejected Harry Truman’s attempt to make the first two years of college free. Instead, the U.S. government assumed all the risk of student loans, while banks and colleges profited. Universities raised tuition costs because consumers could simply borrow more to pay for it, and banks extended government-guaranteed loans to students who had little hope of paying them back. Mitchell poignantly recounts the stories of borrowers including Lisa (no last name given), a 54-year-old single mother of two who took out loans to pay for her undergraduate and graduate degrees and now is on the hook for $96,820, on top of dealing with breast cancer and anxieties over her daughter’s student debt. Mitchell masterfully explains how America got itself into this debacle, though readers will wish for a more robust inquiry into the solutions he supports, which include forgiving interest on student loans, making community college “truly free,” and government funding for apprenticeship programs. Still, this is an immersive and illuminating introduction to a hot-button issue.