: America has a $1.7 trillion student-debt crisis: ‘Where is the call for wise student borrowing?’

by | Jul 18, 2023 | Stock Market

Last month, the Supreme Court ruled that the Biden administration’s student-loan forgiveness program, which would have forgiven $430 billion in loans held by 40 million borrowers, cannot move forward as originally proposed.  This is regrettable, but in some ways, we’re missing the point. When it comes to the crisis of student debt, where is the call for wise student borrowing? Isn’t anyone making the connection between this national problem and the financial-illiteracy crisis? (Financial illiteracy cost Americans roughly $1,819 each in 2022, according to this survey from the National Financial Educators Council.)

A lack of financial knowledge and skills leads to wildly different approaches. One student may enroll in an expensive private college in their town, and decide to live on campus, despite having to take on debt that will be very difficult to pay off, given their choice of major. Another student may set their sights on the same school, but plan to save thousands of dollars by going to the local community college for two years before transferring. Not everyone agrees that the community college as a gateway to a more elite institution is a foolproof plan. As Chana Schoenberger, now editor-in-chief of American Banker, noted in this 2017 article on MarketWatch, students in the American Honors program at some community colleges can apply to transfer to top schools like Amherst College, Duke University, the Massachusetts Institute of Technology, and George Washington University. But she cautions: “Keep in mind that transfer students may pay …

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