How the next president should fix America’s student-loan problem

AMERICA’S TOTAL student debt, at over $1.5trn, is larger than the national borrowing of most countries. It has quintupled in size since 2004, overtaking both borrowing on credit cards and car finance. This growth is often presented as evidence of a crisis. But the rise in total debt, though arresting, is not the real problem. It largely reflects increased borrowing by graduate students, such as budding lawyers, who will go on to be high earners. And 92% of student debt is owed to the federal government, meaning defaults pose no risk to the financial system (see ). The real problem is that 11m Americans, many poor and non-white, and many duped into studying for worthless degrees, struggle to repay even modest debts.Some Democratic candidates for president seem not to know this. Bernie Sanders, the front-runner, wants to cancel all student debt—a handout that would indeed provide relief to those who are struggling, but would also offer an enormous windfall to the well-off. Elizabeth Warren would cancel all debt up to $50,000, a policy that is similarly indiscriminate. Thankfully Joe Biden and Mike Bloomberg, who announced his student-debt policy on February 18th, have plans that are better suited to the problem.