Anthony Hennen cautions Martin Center readers that the United States should not follow Australia’s lead when it comes to student loan debt.
The American student loan system is a mess, weighing down more than 40 million borrowers with $1.3 trillion of debt. As a result, analysts and journalists in search of alternative systems often look abroad. Some claim they have found the answer they are looking for Down Under, describing the Australian student loan system as an indictment of American student loans and a program that should make Americans go red with jealousy.
To be sure, the Australian system accomplishes one important thing the United States fails to do: providing student loans without driving young people into financial distress.
Yet, the Australian system may not be all it appears, for savings by former students are largely the result of shifting the cost onto taxpayers. Indeed, the real solution for Australia and the United States may not be found through financing fixes; rather, it may be that they are solving the wrong problem. Perhaps the focus should be on cost control, which financing does not address.
