Interviewer: When you say, “Deal with,” what kind of problems do people have with different kinds of loans? What have you seen out there as not being able to pay them back?
A. Campbell: The problems center on students actually being able to pay back their loans. You remember the financial crisis from 2008. It was the mortgage bubble. It was the result of a number of problems and a number of issues.
Basically, people were borrowing and spending too much and they were able to do that in large part because of the prices, the values of houses kept rising. Once that bubble burst, we had a real problem.
Lack of High-Paying Jobs and Accruing Massive Student Loan Debt Prevents Individuals from Making Other Large Purchases, Thus Depriving the Economy of Needed Revenue
The next big bubble is the student loan bubble. Right now, even now it’s affecting our economy. Previously, students were able to graduate from college or from technical schools, go out and get jobs and be able to repay their loans back and at the same time, buy cars, buy houses.
Now the student loan debt is so high that many of them are unable to make these purchases and purchases of homes is a huge driver of the economy, as is purchases of motor vehicles as well.
Are Students Oversold on College? The Coast of Higher Education Has Increased Substantially Compared to the Rate of Inflation
Interviewer: It wasn’t that students were irresponsible about getting student loans; it’s that they don’t have the ability to pay them back?
A. Campbell: I think it’s a combination of factors. Higher education has increased, the cost has increased dramatically versus the rate of inflation and that’s been a huge part of the bubble. You bring up another point is that the students do have some responsibility, but the students are oversold on the notion that getting a four year degree has value that it once had before. They’re oversold. That’s false.
That’s not really true anymore. There’s a lot more opportunity in the vocational programs nowadays, I think than there is in four-year colleges. I think the value of the four year degree is overstated dramatically. Too many people think that they just go to school and get enough schooling, they’re going to get a good job and that’s not the way it works at all unfortunately.
The Government Is Taking Action against Institutions Engaging in Fraudulent Practices
It’s a lot about who you know. It’s a lot about your emotional intelligence and it’s a lot about choosing the right programs. Unfortunately, you can’t simply blame one disreputable institution. The government has come in and clamped down on many of the private vocational schools who are engaging in a lot of fraud and the government has to come in with new programs.