Who Pays The Price?

TODAY, about 2900 students will register in the Graduate School of Arts and Sciences. They are the professors, architects, writers and scientists of the country's future, the backbone of the professional and educated classes.

However bright the coming decades appear for these scholars, a good number of them one day will have a dark past. They finance their undergraduate and graduate educations with loans supplied by the federal government at subsidized rates, promising to repay the American taxpayer once they find an occupation. But, in numbers far greater than one would expect from so privileged a group, these future leaders will betray that trust.

The Department of Education reports that approximately $6 billion in student loans are currently in default, including $4 billion in the popular Guaranteed Student Loan program and $2 billion in Federally Insured Student Loans and Perkins Loans. More than one million graduates owe money to their national government for money they borrowed on the understanding that they would pay it back.

Taxpayers now must put up nearly $1 million a month merely to collect on the bad loans--and have paid $31 million in similar efforts during the last three years. According to the Department of Education, it costs between 25 to 45 cents to recover each dollar on which students default.

THIS FIGURE--about $6 billion in total defaulted loans--drives home the reluctance to repay federal financial aid by the very students who most forcefully speak of the government's obligation to provide it. The public does benefit from the dollars it lays out in return for a better educated populace.

It's particularly distressing, though, that those benefited with education through public largesse are so ready to disregard one of the basic conventions of our society--the repayment of debt. From farmers in the Midwest who auction off their land to pay back the banks to struggling young families who slowly make payments on their home mortgage, the less-privileged are more serious in discharging financial obligations.

For some reason the defaulting students believe they are somehow better, that they can waive the rules everyone else plays by. They sit in the Ivory Tower thinking big thoughts while their debts go consciously unpaid. And who else is footing the bill but the average American taxpayer--the same taxpayer who struggles to make mortgage payments every month?

THESE STUDENTS are not the only guilty parties in this drama. They reflect a change in the American way of thinking that appears prominently in all manner of government policy and especially in economic matters.

Legislators, and especially the current Administration, have lived dangerously beyond their means--to the point where the national government will spend more than $160 billion more than it will take in next year and will owe several trillion dollars to its debtors.

Affluent American consumers have ballooned the trade deficit with their overeager and unplanned frenzies of spending financed with credit cards and other consumer debt arrangements. Both are beginning to cripple the economy and damage the standard of living. Graduates students who will study these problems would do well to look inward to understand the the ethos that is at their source.