Lloyd Omdahl: student debt soars

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While this may be the second lowest debt in the 50 states, many borrowers are struggling to pay for a now bygone student lifestyle. After all, $ 29,000 is a lot of money, especially if students are majoring in courses that don’t meet market needs. Some borrowers owe more than $ 80,000.

Student debt is growing by 27% per year, six times faster than the national economy and has doubled since 2010.

No bankruptcy allowed

According to Lending Tree, older borrowers – aged 35 and over – have average debts in the range of $ 40,000.

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And there is no escape from debt. Bankruptcy cannot erase it.

Student debt is universal in all 50 states, with a number of borrowers owing more than borrowers in North Dakota. The state-owned and well-run Bank of North Dakota, which has long embarrassed conservative North Dakota, has been a boon to student borrowers.

Government bailout?

Because student loan programs involve 16 million borrowers nationwide, it has come to the attention of Congress as a node in our economy. In fact, Senator Elizabeth Warren, D-Mass., A former law professor, has proposed that the federal government pay off student loans.

Before this proposal finds favorable winds, Americans – especially North Dakotas – will want to know who should bear responsibility for this growing crisis. There is enough blame for everyone and not everything belongs to the students.

At a recent roundtable of retired professors, participants identified a number of culprits.

State cuts funding

The state of North Dakota is one of them. At one time, public colleges and universities received over 70% of their revenues from general funds allocated by the Legislative Assembly. The level has steadily declined so far, state support is between 20 and 30%.

Thus, the state Higher Education Council was forced to allow increasingly higher tuition fees, knowing that students had a clear path to the bank. Plus, new fees and charges have been added over the years to put more strain on student debt.

In the haste to close the financial gap, restrictions on lending were relaxed, so that easier credit was partly to blame.

High expectations

North Dakota students arriving on campuses these days come from a thriving environment, so they expect to continue the same lifestyle as at home. Dormitories are no longer adequate and students are choosing more expensive private rental accommodation. (Besides, there are too many regulations in the dorms.)

Thus, campuses now have poorly filled dormitories and, in some cases, have razed or converted them to new uses.

Students Suffer From What Edward Banfield Called “The Current Direction” In “The Unheavenly City” – the inclination to celebrate the pleasures of the day, the costs be damned, thus deferring the cost to some point in the future. Today is reckoning day.

Raisin bread and cheese

It is true that many students avoid going into debt by taking on part-time jobs and / or relying on their parents. Unfortunately, parents in the low income sector are struggling themselves and are unable to help finance their children’s future.

At our panel discussion, we shared stories about our struggles at college and wondered why student debt must be so great when raisin bread and cheese got us through four years.

Senator Warren’s proposal has the fatal want of inequities in the payment of the great debt of some and the small debt of others. It should also explain how repaying all student debt would be in the national interest.

But 16 million borrowers carry weight in a democracy.

Lloyd Omdahl is a former lieutenant governor of the state and a professor at the UND.