by Lou Jones

Created on: February 09, 2008   Last Updated: March 19, 2008

The increasing number of voters who have growing student loan debt and shrinking incomes may make loan repayment the big education issue in 2008. Since many of those graduating with teaching credentials will be forced to default on loans or choose careers other than teaching, it is an issue with a heavy impact on education in general.

If a forty year-old professor who earns 35,000 a year teaching college dies with 200,000 in student loan debt (after unpaid interest, late fees, and other fees are totaled), and the professor paid 50,000 during the course of her lifetime, who pays the remaining 200,000?

The American taxpayer does.

Who gets the 200,000, plus the 50,000 paid by the deceased professor?

Probably a private company, and very likely one that used to be a public company. In a horrible example of privatization, the government created and then cut loose Fannie Mae, offering up a silver platter of ready made profit without asking Fannie Mae's shareholders and executives to assume the risk of defaulting debtors.

All the profit, none of the danger. Sounds like a business anyone would love an opportunity to get into! Problem is, a setup like that actually encourages companies to keep people in debt, and to keep them from paying on the principal, and to keep them paying for the rest of their lives. If the debtor pays every month for decades but never touches the principal, the loan company collects far more than if the student had promptly or even tardily paid off the debt.

A lot of money slid into a lot of the right campaign funds contributed to the student loan cash bonanza. Until the problem is properly addressed and un-privatized, debtors and taxpayers will suffer. Not only that, students will suffer, too. Students will suffer a teacher shortage, the economy as a whole will suffer because anyone with 100,000 in student loan debts, even a professional in a high paying field, isn't likely to spend a lot of money on nonessentials. And debtors whose degrees don't translate into high incomes won't be spending a whole lot on anything at all. Good luck buying a house when you're already paying more on your student loan debt than most people pay every month on their mortgage!

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