They are too high because the purpose should be to facilitate the educational needs of citizens, not to make a profit.
That is incorrect. The purpose of a loan is to make profit. The
effect is
hopefully to facilitate the purpose to which the recipient intends to put it, but that is not guaranteed. Usually this system creates incentives for lenders to see to it that the effect happens as much as possible (it increases their ability to profit from lending to it), but unfortunately, when you introduce government into the decision-making, it jacks that up a bit.
The spread between the rate the government borrows money and what it is charging student loan customers is too large.
:shrug: hey, it was President Obama's idea to nationalize the student loan industry. And if anything, the reality of how the program is running suggests that the spread is too low. The Government isn't in default on
17% of its' debt, and if it was, you can bet it's cost of borrowing would shoot through the roof.
It is most certainly dangerous, and it can be debilitating and dumb, but not necessarily.
I can see a few examples where it might not be, but that is not true of the vast majority of times that we Americans incur debt, including undergraduate student debt. It isn't necessary, and school administrators (who are incentivized to push it) push it on kids, who then make dumb decisions and sign up for it.
Thanks. She was adamant about going to that school. It was a bit more expensive and selective than some other choices available to her, but that is what she wanted to do. Definitely a good learning experience in that regard, no doubt.
So is the debt associated with it, then.
I went to an expensive (for us) school myself - total cost was probably about $28K/year. Which is why I had to sacrifice to pay for it. Now your daughter is going to have to sacrifice to pay for hers. For me, that meant busting my chops to get a bunch of scholarships and then several years in the military. For your daughter, apparently, it means having a 6% interest rate on her student debt.
And it was a great experience, no doubt, but it wouldn't have been worth accruing that kind of debt over. Unless you are going to some Ivy League institution or something else with instant national name-recognition for your chosen field, one school is generally about as good as another.