I think it is even worse than simply "easy credit", I think the rewards built in encourage exploitation. Allow me to explain.
1) You have capital seeking a return.
2) There exists a basic need that can be facilitated by the application of capital (a degree for a "good job").
3) You remove all the risk out of providing capital for filling the need through government guarantees.
4) You provide a rate of return that is higher than the government guaranteed rate on their own capital instruments (treasury bills).
#4 there, which gives you higher returns on low risk investments, creates a demand for those instruments. And that demand causes a supply of instruments to be created. And the regulation on that supply is minimal.
The result is you get financial institutions giving loans to students for useless degrees at inflated cost institutions knowing that the government has made defaulting nearly impossible (hence the low risk) and they can offer better rates than t-bills.
Students are being exploited exactly like unqualified home buyers were being exploited in the mortgage fiasco of 2008.
What annoys me about the journalistic coverage is that the 'rage views' are "Students are graduating with few prospects from college and a mountain of debt" whereas the bigger story is that "Rich people demanding higher returns, enslave unsuspecting youth through their loan seller proxies."
https://news.ycombinator.com/item?id=6225976
Then there is this observation by dsirijus a few years back which now with the ICO craze seems ever truer:
Any sufficiently advanced business model is indistinguishable from a scam.
We regularly hear people concerned about the hypothetical existential threat of a paperclip maximizer AI being invented in the future, yet this concern reliably ignores the AI overlords we already have: paperclip^Wprofit maximizing corporations. The VM for this type of AI has an incredibly slow clock rate and an extreme CISC ISA that often modifies itself in the RTC interrupt. The AIs are not a future threat; they already enslaved us.
The problem is our unregulated capitalism. Until that is addressed[2] we are merely debating which profit-maximizer AI we want to serve.
(my thanks to Charles Stross for the maximizer-AI/corporation metaphor[1])
[1] https://media.ccc.de/v/34c3-9270-dude_you_broke_the_future
[2] I suggest heavy regulation to protect the useful parts of capitalism. Left alone, capitalism destroys the very markets it needs to survive.
Ah yes, the unbridled laissez-faire capitalist markets throughout the world. It couldn't possibly be that our markets are more regulated than ever before, or that the very regulations and bureaucracy meant to protect us have caused these failures.
No no no, it's capitalism's fault. It's certainly not that government power has for decades been exploited by the incumbents to kill competition.
The market has failed. Now government regulation is necessary to protect us from the evil rich corporations who want nothing but profit. Rest assured, if we allowed them to operate freely it would result in catastrophe!
So pure, unregulated capitalism, lead to wealth inequality far, far more extreme than our current situation.
58 Peter R. Shergold (1982). Working-Class Life: The "American Standard" in Comparative Perspective, 1899–1913. University of Pittsburgh Press. pp. 5–7, 222, 224. ISBN 978-0822976981.
59 Steve Fraser (2015). The Age of Acquiescence: The Life and Death of American Resistance to Organized Wealth and Power. Little, Brown and Company. p. 66. ISBN 0316185434.
Wealth inequality is misleading as it doesn't represent standard of living very well. Income inequality is better in that regard.
With regard to class mobility, can we say at what level it gets too extreme or conversely at what level it is just perfect? A country such as Albania has a lower Gini coefficient than the US but is much, much poorer, but as such has less income inequality. I don’t believe that social mobility is much better there (I happen to have a good friend that lives in Tirana).
Good law in a democracy is a positive externality. Desirable policies benefit everyone but their private benefit to an individual is small even if the individual is altruistic. Government is supposed to resolve market failures, but it itself is the sole reason they exist.
Purely?