By Bob Hildreth

Investigative reporters James B. Steele and Lance Williams know whom to blame for the student loan crisis; it’s big banks, big government and big corporations (see their full article here). They put the spotlight on these institutions for relentlessly seeking profits off of struggling students. But if we are really honest, it is us, the citizens, who are to blame. We let our government enter into a crazy scheme of financing America’s colleges with debt.

As a taxpayer, you had the right to protest. At any time over the past 50 years, you could have elected leaders who would have replaced the federal student loan program. But you looked away. You accepted the indebted fate of your children.

In 1965, the Johnson administration tried to kill two birds with one stone: Help colleges survive and help poor students go to college, using an open-ended subsidy called student debt. Here is how it works: Every year the government makes available an ever-increasing amount of money to colleges — but then turns around and puts students on the hook to repay all that money. The students never see the money and are generally clueless about it … until the debt collectors come calling.

The scheme worked for a while. Colleges gained lots of money, and poor students flocked to colleges for the first time. Seeing that the feds were committed to keeping state colleges in funds, the states stopped much of their support for their own colleges. Who can blame them? If someone offered to pick up your tab, wouldn’t you let them?

Colleges responded by gulping up all the money they could get from the feds. As long as there is competition, subsidies are supposed to drive prices down. But tuitions exploded. Colleges operate like a cartel: Most increase tuition in lockstep with each other every year — by 3.5 percent, to be precise. And for this, the government rewarded them with $110 billion last year alone.

Who gets hurt? The students, of course. The financially weakest part of our population is carrying the heaviest burden. Steele and Williams tell the stories of individual student debtors who are being crushed by this burden.

Higher and higher tuitions are the No. 1 reason half our students drop out of college. Insanely, we have bet the financial survival of our colleges on the ability of young people to meet their financial obligations. Don’t try this at home.

Over the years the liability to the taxpayer keeps on growing. Why? The students are not paying back their loans on time. Federal Reserve Bank of New York says 17 percent of student loans are delinquent, but if you add payments granted deferment and forbearance because students could not or would not pay on time, the number rises to 67 percent. Wow! We would never have let Greece or Puerto Rico get so bad. And there will come a time when taxpayers will have to pay up what students do not.

What’s more, taxpayers, you cannot see how much you may have to cover. The government keeps student debt off its balance sheet. It’s the law for every financial institution to post losses on loans that are delinquent. But the government is above its own laws. It has posted no reserves to protect you from students’ non-repayment. Yet the Congressional Budget Office estimates that the cumulative cost of the student loan program over the next 10 years will be about $168 million. Where are the flaunted profits that Sen. Elizabeth Warren keeps talking about and Steele and Williams willingly confirm?

Ironically, the truest words in their article were spoken by the villain of the piece, Albert Lord, past head of Sallie Mae. Lord said, “This explosion in government lending has left taxpayers at risk for more than $1 trillion, while allowing colleges to inflate the cost of higher education at the same rate that students rack up debt.”

So, dear taxpayers, you have been floating on the good ship of student debt for decades. At first you were on a stream, then a river, and now you are on a really big river: $1.3 trillion in debt. It’s been pretty calm, right? But now the boat seems to be shaking a bit. Look downstream. See the white stuff? You are headed over Niagara Falls.

Bob Hildreth, a member of the WBUR Board of Overseers and a key financial contributor to WBUR’s expanded education coverage, is the founder and executive director of Inversant. Learn more at

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