The Debt Trap: How Student Loans Became a National Catastrophe
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- Create Date：2021-08-02 15:21:08
- Update Date：2025-09-06
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- Author：Josh Mitchell
- ISBN：B08BZW7N1K
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Summary
From acclaimed
Wall Street Journal
reporter Josh Mitchell， the dramatic， untold history of student debt in America。
The average graduate in 2017 left school with $35，000 in student-loan debt。 The national student debt load has soared to $1。6 trillion， far surpassing credit card debt。 Default rates are climbing。 At the center of this crisis is a multibillion-dollar industry that profits from student’s financial peril。 It is clear that the system is broken。 How did we get here？
In The Debt Trap， Wall Street Journal reporter Josh Mitchell tells the untold story of the scandals， scams， predatory actors， and government malpractice that have created this monster。
The tale begins in 1957 with the launch of Sputnik。 Afraid that America was falling behind the Soviets in science education， Congress created the first ever student loan program in an effort to enroll more students in college。 What followed were a series of well-intentioned government actions that set in motion a cycle of reckless lending。 Suddenly， the higher education market was the Wild West。 Easy access to loans allowed colleges to raise tuition to unheard of levels， which in turn lead Congress to increase loan limits。 This spiral continued for decades as the private banks that fronted the money made huge profits on interest。 Sallie Mae， originally a government entity， was transformed into the most profitable publicly traded student loan lender in history。 Suddenly， student loans were big business。
As he charts the gripping seventy-year history of student debt in America， Mitchell never loses sight of the countless student victims who find themselves ensnared by an exploitive system that depends on their debt。 Mitchell also draws alarming parallels to the housing crisis in the late 2000s， showing how we may be on the brink of another catastrophic crisis。 Mitchell’s character-driven narrative is required reading for anyone wanting to understand the central economic issue of our day。
The average graduate in 2017 left school with $35，000 in student-loan debt。 The national student debt load has soared to $1。6 trillion， far surpassing credit card debt。 Default rates are climbing。 At the center of this crisis is a multibillion-dollar industry that profits from student’s financial peril。 It is clear that the system is broken。 How did we get here？
In The Debt Trap， Wall Street Journal reporter Josh Mitchell tells the untold story of the scandals， scams， predatory actors， and government malpractice that have created this monster。
The tale begins in 1957 with the launch of Sputnik。 Afraid that America was falling behind the Soviets in science education， Congress created the first ever student loan program in an effort to enroll more students in college。 What followed were a series of well-intentioned government actions that set in motion a cycle of reckless lending。 Suddenly， the higher education market was the Wild West。 Easy access to loans allowed colleges to raise tuition to unheard of levels， which in turn lead Congress to increase loan limits。 This spiral continued for decades as the private banks that fronted the money made huge profits on interest。 Sallie Mae， originally a government entity， was transformed into the most profitable publicly traded student loan lender in history。 Suddenly， student loans were big business。
As he charts the gripping seventy-year history of student debt in America， Mitchell never loses sight of the countless student victims who find themselves ensnared by an exploitive system that depends on their debt。 Mitchell also draws alarming parallels to the housing crisis in the late 2000s， showing how we may be on the brink of another catastrophic crisis。 Mitchell’s character-driven narrative is required reading for anyone wanting to understand the central economic issue of our day。
Reviews
Andrew Palumbo
，
The Debt Trap is a quick but thorough history of federal financial aid in the United States that uncovers some of the history and politics that have resulted in the complex system that exists today。 I work in higher education and consider myself well-versed in the current system， but I was completely unaware of the machinations and greed that serve as the foundation for the federal financial aid program today。Josh Mitchell’s book stands out because of the access he has to some of the key individ The Debt Trap is a quick but thorough history of federal financial aid in the United States that uncovers some of the history and politics that have resulted in the complex system that exists today。 I work in higher education and consider myself well-versed in the current system， but I was completely unaware of the machinations and greed that serve as the foundation for the federal financial aid program today。Josh Mitchell’s book stands out because of the access he has to some of the key individuals who were involved in the creation and manipulation of the federal aid system。 At a critical point in the expansion of higher education， key individuals and the federal government itself opted for a model - student loans - that would turn a profit and push higher education to be perceived as a private good rather than a public one。 What’s surprising is how little critical thought appeared to be put into the early financial aid system when one considers how large an impact is has had in creating the United States’ unique and troubled financial model。Mitchell’s book moves quickly and his storytelling keeps the book interesting。 It reminds me a lot of The Big Short by Michael Lewis。 Ultimately， Mitchell does a solid job of telling this history and identifying key points that have had an outsized impact on the evolution of the federal financial aid system and， more specifically， federal student loans and parent plus loans。 My one critique is that， oddly， at the end of The Debt Trap， Mitchell seems to dive unexpectedly into his own personal opinions about whether higher education should be a public good and funded by the government。 There was no real basis in the book for this to pop up unexpectedly in the conclusion and the personal/political opinion just seemed to cheapen the excellent writing and storytelling up to that point。 It was odd because I really enjoyed the book， but it left a bad taste in my mouth and is one of the final things that a reader comes across。 Regardless of personal opinions on this matter， I enjoyed The Debt Trap because it was largely free of the politicizes rhetoric that dominates news coverage and social media。 To end this book with an unnecessary and unwanted personal opinion from the author that was fairly removed from the actual content and style of the book was just a bit disappointing。 Still I’d recommend this book to others interested in higher education， finance， and U。S。 history。 。。。more
Rosemary
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The Debt Trap by Josh Mitchell is a comprehensive view of the role of student debt in today’s society。 After a detailed review of the history of the program，Mitchell connects the increase in college tuition with the availability of student loans。 Through personal stories of individual borrowers， we see how for many the burden of student loans is borne by people in all walks in life with little hope of relief and holding them back from true economic mobility。 This is an important book for all but The Debt Trap by Josh Mitchell is a comprehensive view of the role of student debt in today’s society。 After a detailed review of the history of the program，Mitchell connects the increase in college tuition with the availability of student loans。 Through personal stories of individual borrowers， we see how for many the burden of student loans is borne by people in all walks in life with little hope of relief and holding them back from true economic mobility。 This is an important book for all but especially potential students and their families。 。。。more
Bargain Sleuth Book Reviews
，
For this and other book reviews， visit www。bargain-sleuth。com。I went back to school in 2005 while I was home with my two oldest children。 I took out just enough to pay for my schooling through a private Wisconsin university that offered an online degree program。 When I graduated， I had $28，000 in loans。 Flash forward 8 years of paying over $500 a month （$6000 a year） and I still had over $26，000 in loans。 If my mother-in-law had not died and left my husband an inheritance， we’d still be paying o For this and other book reviews， visit www。bargain-sleuth。com。I went back to school in 2005 while I was home with my two oldest children。 I took out just enough to pay for my schooling through a private Wisconsin university that offered an online degree program。 When I graduated， I had $28，000 in loans。 Flash forward 8 years of paying over $500 a month （$6000 a year） and I still had over $26，000 in loans。 If my mother-in-law had not died and left my husband an inheritance， we’d still be paying on the loans。 Which is why we’ve always taught the children that they should pick one of the two local universities or the technical college， stay at home， and get their degrees the less costly way。 Sadly， our oldest has not heeded our pleas and is planning to go to a public university across the state。 We’ve saved some money for her schooling， but not enough to cover her five year program。 I worry about the debt load she is going to take on。Which is why， when NetGalley and Simon and Schuster offered me The Debt Trap: How Student Loans Became a National Catastrophe to read in exchange for an honest review， I gladly accepted。 The book will be released to the general public August 3， 2021。It really all began after World War II， when the G。I。 Bill provided each veteran with unemployment checks， $500 a year for college tuition， and loan guarantees to buy homes。 While many women served in the military， the powers that be labeled their units civilian， so there were no G。I。 benefits for them。Then in 1957， Sputnik launched and Americans were scared out of their minds of Soviet dominance。 Lyndon Johnson looked back fondly on the loan he was given to go to college; it helped make him who he was。 He believed if the United States could make college affordable， Americans could beat the “Commies”。 It was then， as a member of Congress， that the first federal student loan program started。Of course， the easy access to loans meant that colleges could raise their tuition at rates that exceeded inflation。 So what did Congress do？ They increased loan limits and interest rates and let more people borrow money。 Private banks that were loaning the money to students made huge profits on the interest paid by former students。At the same time， Congress made it harder and harder for borrowers to discharge their loans。 In 1976， they made it difficult to get out of debts through bankruptcy， but still possible。 In 1997， the legislation they passed makes it nearly impossible to get out of paying federal student loans。 In 2005， Sallie Mae backed a bill that blocked student borrowers from declaring bankruptcy with their private student loans。 Shockingly， during the 2008 meltdown of the economy， Sallie Mae was the first bailout of the financial crisis。The Debt Trap is an interesting history of how we got where we are today， and offers anecdotal stories at the beginning and the end of the book。 There’s no easy answer to the financial aid crisis in our country， which now tops $1。5 TRILLION。 Universities keep raising tuition and housing rates beyond the rate of inflation， and lenders are raising the interest rates and loan amounts for borrowers。 Something has to give， or as a country， we’re going to be collectively in a world of hurt。 。。。more
Jeff
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