While the Occupy Wall Street protesters are mad about many things, student debt stands out. And rightly so - when reckless banks destroy the economy, the government bails them out. But when college graduates can't pay their students loans back to banks because there are no jobs, due to banks destroying the economy, they're out of luck.
Now a group of Occupy protesters has launched a campaign encouraging students to repudiate their debt. "There is no justice in a system that openly invites profiteering on the part of lenders," they say.
I understand the anger. But the debt repudiators have identified the wrong villain. The real profiteers in the higher education system aren't the lenders - they're the colleges and universities. And they've already been paid in full.
It's true that, until recently, most student loans were issued by private banks. But the interest rates were, for the most part, regulated and subsidized by the federal government. And after landmark reforms spearheaded by President Obama in 2010, private banks have been largely cut out of the system. Now the U.S. Department of Education does most of the lending, at relatively low rates.
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