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This. It's simple supply and demand. Student loan programs also create inefficiencies in the labor markets by encouraging those who shouldn't be in college, to go to college.
While I believe students should be encouraged to do some form of terciary education after high school, that does not and should not necessarily be a university education.
If you want to be an electrician, going to college is a waste, especially that first year when you take all those liberal arts classes.
Well said.
It is way past time we stopped denying the fact that not every kid belongs in a college or university. Some people really should be working with their hands and there are too few provisions for those kids.
I'd like to see loans provided for trade apprenticeships paid directly to provide on-the-job training instead of throwing oodles of money at for-profit schools that offer nothing but debt.
I don't think that ending the federal loan program is the answer, but, it definitely needs to be re-focused and there has to be some sort of accountability on the part of the people who are benefiting from receiving this money.
i can't make my mind up about this issue. it is extremely important to provide americans with access to education, on the taxpayer dime. Because we are a "lab of democracy" it makes sense to let the states handle it, on one hand, but then on the other hand the federal government has a far greater ability (and willingness) to spend.
i do think that student loans just drive up the cost of tuition, since rates are determined in some sort of market competition. this has led to an arms race for administrators and professors. Some of these university employees are getting rich off the current system.
Are we really a "more educated citizenry" at the moment? I really don't think the federal government getting involved in education has helped education at all.
Also something people need to keep in mind is that Dr. Paul is saying the federal government should phase out it's student aid. He's not saying anything about what individual states can do. Here in Georgia we have the HOPE scholarship. I'm sure philosophically Dr. Paul disagrees with any government involvement in education but he understands it's not the place of the federal government to dictate to the states what they can and cannot do.
What would happen if the government did not guarantee student, or any other, loans? At least a college education would be once again limited to students whose parents could afford to pay. At least this would get the working class riff raff out of colleges and reserve the spaces for the children of the executive and investor class like it used to be.
Another possibility could be the government provides so much to each student per year and the colleges, public and private, cannot charge any more than that amount. These grants would be paid back into a education trust fund by installing a 10% surcharge on the recipient's gross income for the rest of their lives.
fox news can't stand ron paul and will use any sound bite they can to "discredit" him.
it certainly would be wise to stop the government backstops of student loans, especially with more students being unable to turn that loan into a job, and with taxpayers now being forced (through government taking over the school loan industry) to eventually eat those losses. i don't even think that bankruptcy is even an option with student loans.
it would just mean more taxpayer money wasted, and, of course, higher tuition costs for everyone who ever wanted to go to school.
Are we really a "more educated citizenry" at the moment?
compared to what?
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I really don't think the federal government getting involved in education has helped education at all.
based on what?
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Also something people need to keep in mind is that Dr. Paul is saying the federal government should phase out it's student aid. He's not saying anything about what individual states can do. Here in Georgia we have the HOPE scholarship. I'm sure philosophically Dr. Paul disagrees with any government involvement in education but he understands it's not the place of the federal government to dictate to the states what they can and cannot do.
the problem here is that the states do not raise revenue in the same way that the federal government does. The states have very limited capacity to spend, because almost all they can do to raise revenue is tax.
the states may be better at managing universities, but what i'm concerned about is that delegating the funding obligations to the states is essentially saying that higher education should be a lower spending priority nationwide.
Student loans are one of the reasons the price of college has exploded. Anytime the government gets involved in anything the price artificially goes up far higher than normal inflation. Look at health care for another example. If government didn't get in the way of the free market the price of everything would be more affordable and life would be easier for all.
Housing, as well. The GSEs and the CRA caused a MONSTER of a housing and mortgage bubble and burst. We're STILL not over it.
From Fannie Mae's former chief credit officer...
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Krugman could not have been more wrong in his assertions. Somehow he missed Fannie and Freddie's acquisition of $4.3 trillion in subprime, low down payment (5% or less) and Alt-A loans. How about the $2.7 trillion of CRA loans? After accounting for overlap among these groupings, he somehow missed some $5 trillion in such loans, trillions of which remain to plague the nation's economy.
...CRA and GSE Act promoted "innovative or flexible" lending practices such as downpayments of 5% or less, acceptance of impaired credit, higher debt ratios and creative definitions of income. This loosened underwriting resulted in total CRA originations and non-overlapping GSE AH acquisitions by the GSEs of $7 trillion over the period 1993-2007. This tsunami of high risk lending spawned and sustained a housing bubble unlike any this country has ever seen.
Why did GSE Act and CRA's mandated lending have such a huge impact? Historically home prices were determined by supply and demand at a local level. These two acts changed this local dynamic. Both operated nationally, due to the fact the Fannie and Freddie, along with the big banks responsible for the overwhelming majority of announced CRA commitments, were all national in scope. They were not only largely independent of local supply and demand pressures; their loosened credit standards created demand.
He's right...and this ought to make the OWS crowd happy. They have been whining about student loan debt.
This is ironic coming from Ron Paul. It is the universities that are "privatized" (for-profit) that took advantage of the student loans and provided a sub-pare education that left graduates unqualified for jobs.
This. It's simple supply and demand. Student loan programs also create inefficiencies in the labor markets by encouraging those who shouldn't be in college, to go to college.
While I believe students should be encouraged to do some form of terciary education after high school, that does not and should not necessarily be a university education.
If you want to be an electrician, going to college is a waste, especially that first year when you take all those liberal arts classes.
For profit colleges accepted anyone regardless of their academic potential. These colleges were simply a conduit of funding to enrich themselves. Public Universities, on the other hand, admit students according to their academic (not financial) potential.
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The for-profit college industry makes its money by recruiting students — overwhelmingly poor and working-class students — who must draw from the federal till to pay tuition. In many cases, as much as 90 percent of the revenue of a for-profit college company comes from the federal government, in the form of Pell Grants and student loans. The more students the companies enroll, the more federal money they get — and the more profit they make.
Get the government OUT of student loans, or face a similar financial crisis when that debt bubble bursts, too.
I'm still trying to decide if there will in fact there will be serious ramifications to a student loan bubble burst. Banks and taxpayers will be lefting holding the tab if millions of students default, no doubt, but defaulting on a loan may in fact increase graduates' disposable income by a few percentage points, and thus contribute a little more to the economy. Granted, credit scores will hit rock bottom, and obtaining credit will be nearly impossible for about 7 years, but I have trouble believing that defaulted student loans will hold down the economy in ways similar to the housing default, whereas an underwater/defaulted loan has far reaching effects in many sectors of our economy.
I'll be glad to listen to other opinions on this though.
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