Freakonomics Radio
The $1.5 Trillion Question: How to Fix Student-Loan Debt?
As the cost of college skyrocketed, it created a debt burden that’s putting a drag on the economy. One possible solution: shifting the risk of debt away from students and onto investors looking for a cut of the graduates’ earning power.
It is hard to overstate the magnitude, and the severity, of the college-debt load in the U.S. Roughly 45 million people have student-loan debt, totaling $1.5 trillion. Of those who graduate from a public, four-year university, nearly 60% have debt, with an average of more than $27,000. And those are the graduates — roughly 40% of students at those schools don’t graduate within 6 years.
“And student debt — there’s no getting out of it, even in bankruptcy,” says Purdue University president Mitch Daniels. “You can see the consequences in individual lives, and now you can see the big consequences for us all, because young people are postponing buying houses, postponing having children, they’re starting fewer businesses than they used to. Bad deal all around.”
Purdue University is a large, well-regarded state university in West Lafayette, Indiana. The school…
