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Do student loans cause income inequality?

Do student loans cause income inequality?

Engineering Professor - complains about the destructive effects of capitalism requiThe distribution—and redistribution of income—is back in the news. The Economist reported on study of the persistence of income distribution from generation to generation, which generated some discussion.

Then, Gary Becker and Richard Posner jumped into the debate with some often overlooked observations.  Judge Posner, however, flag a growing problem that is just getting some attention:

And it must be borne in mind that some programs that purport to reduce inequality, such as the federal student loan program, may well increase it, by imposing debt burdens disproportionate to the value of the education that they finance.

Seems only a few years ago, the discussion of higher education focused only on the benefit side: How much more money will you earn with a BA, MA, or Ph.D.? Now, the discussion starting to turn to the costs: Will the bump in income more than offset the additional cost of debt?

Do student loans cause income inequality? | Economics International Blog.

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1 Comment

  1. March 18, 2013    

    It’s time we did something about sky-rocketing college costs and the huge federal aid programs that support them. My daughter is a junior at a major university. Although she is a pre-med student, she is forced to take BS courses in diversity, film appreciation, women’s studies, etc. Eliminating the chaff would allow colleges to hold the line on costs while enabling graduates to earn degrees that will help them earn enough to pay back their loans.

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