06/13/2012 04:07 pm ET

Why College Students Don't Borrow Enough

After the months of teeth gnashing and media panic over America's ballooning student debt burden, what I'm about to suggest will strike some readers as a bit ... nuts. But consider this possibility: U.S. undergraduates aren't deep enough in debt. They should take out more loans.

It sounds inconceivable. Outstanding student loans have shot up to around $1 trillion, a roughly four-fold increase since 2003. Thirty-eight percent of undergraduates now borrow for school, and more than half of full-time students do so, according to the most recent Department of Education statistics. The default rate, meanwhile, is increasing.

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