For the first time in history, the total extant student loan debt has exceeded the total extant credit card debt. This was inevitable as more students go to college, and more of them borrow more money in order to go.
Although it may be statistically meaningless, I think it is fitting compare the two, because student loans and credit cards are dangerous for the same basic reason: unlike car loans or mortgages, these lines of credit are handed out to youngsters without any regimented plan to pay them back. It is easy to be suckered into a huge and eternal debt without having any idea how much and for how long you will be paying.
This, I believe, is the one reform we really need in the student loan system: making a college loan more like a car loan or mortgage and less like a credit card balance, requiring a sit-down meeting detailing how much you should borrow, how much you can safely borrow, how to pay the remainder of your bill without loans, and then how much you will be paying back and when. A college loan should require as much explicit planning as any other loan of comparable size. Right now, it is up to us to apply that level of rigor and discipline ourselves.
Read More