Senator Warns Of A Student Loan Bubble
Each year, the federal government provides more than $150 billion in grants and loans to help students pay for college. And while a bachelor's degree has become increasingly valuable, young people are taking on record levels of debt to earn that degree.
That's the backdrop for a Senate hearing Thursday on reauthorization of the Higher Education Act, the 1965 law which governs the federal financial aid system. As part of a series of conversations about paying for college, Morning Edition spoke to Sen. Tom Harkin, D-Iowa, who will run the hearing.
The chairman of the Health, Education, Labor and Pensions Committee tells NPR's Linda Wertheimer that for-profit, public, and private colleges and universities should be more accountable for the federal student aid they receive.
On income inequality in higher education
Right now, if you are a high-income, low performance student, you have an 80 percent chance of going to college. If you are a low-income student, but high-performing with a B or better average, you only have a 20 percent chance of going to college. That's inexcusable.
On student debt's economic impact
There are a lot of indications that this is a drag on our economy. In other words, students who have graduated from college, just starting work, can't afford to buy a new house, can't afford to invest in other things ... . How are we going to make it easier for students to go to college and get an education without taking on this huge debt burden?
On investigating for-profit colleges
We found that a lot of these for-profit schools were going after the poorest students so they could get the maximum Pell Grants and loans. A lot of the students were not getting a good education; they were dropping out and ... defaulting. But the for-profits got to keep the money.
Comparing for-profit colleges and the savings-and-loan crisis
I think that's an apt comparison. The housing program started out with, I think, good intentions. But then financiers and others found out how to make a lot of money so they created this housing bubble. I think what we have now is another bubble in the student loan sector with these for-profit colleges.
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