Editorial: Looming boondoggle

While remnants of the nation’s housing crisis linger — particularly in hard hit locales, such as Las Vegas, where foreclosures remain a stubborn issue — the country has pushed forward and markets have recovered or stabilized.

That’s the good news. The bad news, however, is that another financial boondoggle looms on the horizon.

“Total outstanding student debt — almost all guaranteed or made directly by the federal government — has quadrupled since 2000 to $1.2 trillion today,” the Wall Street Journal reported Monday. That’s trillion, with a “T.”

In addition, “More than a fifth of all student debt is at least 90 days delinquent, according the New York Federal Reserve,” the Journal noted.

There is now more outstanding student loan debt than Americans owe on credit cards or for auto purchases.

Note that most of this money is owed to the feds. In their zeal to encourage everyone to attend college regardless of ability or preparedness, well-intentioned politicians have implemented policies that entail loaning billions of other people’s money to young adults with no guarantee that it will produce any benefit or ever be paid back. Need $100,000 so you can major in Brazilian poetry? Come on down!

And American taxpayers are left holding the bag.

Had any private financial institution engaged in such reckless fiduciary practices, the Justice Department would be issuing subpoenas and launching a full-blown criminal investigation. But for Congress, it’s business as usual.

Jeffery Dorfman of Forbes magazine reports that last year’s federal budget included a “$21.8 billion write off of expected student loan repayments” — and that’s likely just the beginning. The Obama administration has also expanded several loan forgiveness programs, even though evidence exists that the debt burden is manageable for most students.

“People with much lower incomes than the average college graduate pay off car loans as a routine matter,” Mr. Dorfman argues. “Student loan debt becomes a problem when the borrower wants to spend their newly increased incomes on nice food, clothes, cars, housing and vacations rather than on their student debt payments.”

Progressives blame soaring higher-ed costs and corrupt for-profit colleges. But costs inevitably go up when there’s so much “free money” floating around the system. And if certain for-profit campuses are nothing more than fraudulent diploma mills, why is the government loaning money so students may attend them?

Several vocal groups are currently lobbying Washington seeking relief for those burdened with student loans yet void of solid job prospects. But who will advocate for the taxpayers forced to foot the bill?