# The student loan debate revisited

Vox Day put out another video, the focus being on debt:

He mentions, as well know, that student loan debt, unlike other forms of consumer debt such as credit card debt or mortgage debt, cannot be discharged in bankruptcy court.

However, he fails to realize that:

Yes, although credit card debt can be discharged, it’s also much harder to qualify. A 17 or 18-year-old with no credit history and no collateral is not going to be able to get a $50,000-$200,000 credit line, to begin with. It’s not like someone is presented the choice of choosing between either student loan debt or credit card debt.

Student loans typically have much lower interest rates than credit card debt (at around 5-7%/year, versus over 10-20%/year for credit cards) and there are tons of forgiveness, forbearance, deferment, and other payment plans.

A college degree, unlike a new car or TV, cannot be repossessed.

Although student loan debt is obviously a burden, the picture is not that bleak if you can find a decent job, and this is especially true for STEM grads. The way payments are set up, typically people only a pay a small fraction of their income, so if you’re making $50,000/year or more, student loans may only be a small fraction of that. It’s not like all your money is taken away. This is how it’s possible for many young people to still maintain a relatively decent standard of living in spite having a lot of student loan debt. It’s not uncommon for STEM grads with good jobs to pay-down the loans slowly while having enough leftover income to buy a home and invest in the stock market. Of course, ideally, there would be no loans at all, which are like a tax, but then not having a degree worsens your job prospects. Choosing between a$50-120k/year job with student loan debt, versus a low-paying job and having no debt, the choice becomes obvious. This notion of student loan debt being like ‘debt slavery’ is more hyperbole than reality.

This student loan debt ‘tax’, however, is offset by increased wage growth for college grads, a trend that has become pronounced since the early 90’s and has only accelerated since 2008. Up until about 2 generations ago, college grads and high school grads had roughly equal wage growth.

I disagree with Vox that there will be a debt crisis in America. 15 years from now, people will still be predicting debt crisis, just as they were 15 years ago. At what point do you admit you were wrong. It’s not like a ‘hard science,’ in which you can accurately forecast if and when something will happen. Rather, incorrect forecasts in the social sciences have much less accountability and precision and can be extended indefinitely.