Your Kid’s College Degree Could Destroy Their Financial Future, and Washington Helped Build the Trap

New Rules, Same Broken Machine

Let me give credit where it is due. The Trump administration just finalized rules that will cut off federal student loan access to college programs that cannot demonstrate real earnings gains for graduates. Schools that churn out unemployable degrees at luxury prices will lose access to the federal loan pipeline.

That is a rational policy. I support it.

But do not let anyone convince you that this fixes the student loan disaster in America. It does not. It is one guardrail added to a highway that should never have been built the way it was.

The Government Created This Mess

Here is the truth that nobody in Washington wants to say out loud: federal student loan programs are the primary reason college tuition is unaffordable.

This is not complicated. When the government guarantees unlimited money for any 18-year-old who wants to attend any institution offering any degree, universities have no incentive to price their product reasonably. They price it for whatever the loan program will support. And for decades, that meant tuition could increase at multiples of inflation year after year because the bill always got paid.

• Government subsidizes the product
• Price of the product rises
• Government increases loan limits to cover the higher price
• Price rises again
• Repeat for fifty years

The result is a generation of Americans drowning in debt for degrees that in many cases did not move the needle on their earning power at all.

The Bankruptcy Scam Nobody Talks About

Here is the part of this story that should make every consumer absolutely furious. Student loans, in most cases, cannot be discharged in bankruptcy. Think about what that means.

Every other consumer who gets in over their head, whether through medical bills, credit cards, or a bad business decision, has a legal safety valve. Not student borrowers. They are locked in. The debt follows them. It compounds. It grows.

A couple in their sixties recently made headlines because their student loan debt has grown to $500,000. They cannot retire. This is not a cautionary tale. This is the system working exactly as it was designed to work for the lenders.

If private banks were making these loans and the loans carried normal bankruptcy discharge rights, here is what would happen:

• Lenders would have to actually evaluate whether the borrower could repay
• Interest rates would reflect the real risk of lending six figures to a teenager with no income
• Very few students would take on massive debt at high interest rates for low-earning degree programs
• Colleges would have to price their programs based on what the market could actually support

That is called a functioning market. We do not have one in higher education. We have a government-sponsored debt machine.

The Fix Nobody in Washington Will Actually Propose

The new earnings-threshold rules are a step. But they are reversible. The next administration can undo them. Structural change requires Congress to act, and Congress has spent decades refusing to challenge the higher education lobby.

The real solutions are straightforward even if they are politically difficult:

• Remove federal backing from student loans entirely
• Let private lenders make student loans with full bankruptcy discharge rights attached
• Force colleges to compete on price in a real market
• Stop pretending that every 18-year-old needs a four-year degree to have a successful life

Until the federal government gets out of the student lending business, tuition will keep rising, debt will keep piling up, and more Americans will spend their retirement years still paying for their sophomore year philosophy class.

The new rules are a start. The system is still broken. And the people who built the system are still in charge of it.