June 29, 2012
Student Loans and Common Sense
College is expensive but everyone deserves the opportunity to go to college, right? Total student loan debt in over $1,000,000,000,000, a number now greater than total credit card debt but it's worth it, right? It must be right otherwise Congress would not have recently extended the Federal student loan rate reductions by large bi-partisan votes, right?
Before you say "Right, right and right" read "Federal Student Aid and the Law of Unintended Consequences" by Professor Richard Vedder in the May/June 2012 issue of "Imprimis" published by Hillsdale College.
To find the article: Click HERE
The student loans are not the only government program where the unintended consequences are ignored and political courage is absent. No surprise, a government "entitlement" spawns its own constituency that politicians can challenge or even reform only at the risk of losing the next election.
Posted by warrenpeterson at June 29, 2012
10:06 PM | Email This
1. Of course it's wrong. The student loan program should be ended.
2. Anyone else notice that the more financial "help" that is available the more tuition rises?
@2 & 3,
Physician, heal thyself
In addition to performance-based scholarships, Hillsdale also offers need-based scholarships, grants and low-interest loans. Because Hillsdale College chooses to remain completely financially independent, we allocate over $14,000,000 to financial aid, resulting in an average aid package of nearly $12,000 per student.
we allocate over $14,000,000 to financial aid, resulting in an average aid package of nearly $12,000 per student.
As usual, you are wrong MikeBS. All of that private money. Not a single dime of government subsidy. There's nothing wrong with anyone getting a loan for anything, as long as it doesn't come from Uncle Sam.
@5 Jeff B. on June 30, 2012 09:09 AM,
As usual, you are confused and wrong.
@2 jimc did not qualify whether tax dollar funded help vs private dollar help causes tuition increases.
Second, Hillsdale College, despite its claim of financial independence runs its college business as a tax exempt 501(c)3 and it sucks at the teat of government in ways a private for profit institution of education, like University of Phoenix, does not.
If providing financial help to students causes tuition increases, then let the likes of Hillsdale and Grove City colleges lead the way forward.
Again MikeBS, you are wrong.
All other Universities accept government financial aid. Including University of Phoenix.
Hillsdale is the only college that does not accept any government money of any kind.
Many books and studies have shown the link between rising financial aid and rising tuition. It is semantic, petty and typical of you to say that because jimc did not specifically state this, that it somehow invalidates the central argument, which had been proven many times over.
Further, because you are a statist, you are lacking the common sense to understand the difference between a private loan, and a public subsidy, which is the point of Warren's post.
Oh, and MikeBS, UW and almost all Universities are run as tax free 501(c)3s, including Hillsdale. So you don't have an argument there either because although some institutions are for profit, they also accept subsidy as illustrated above.
In other words, there is no correlation between subsidy and organization tax status, but there is a correlation between subsidy and rising tuition.
But I don't expect you to comprehend any of this.
Oh and MikeBS, why not read the article in Imprimis. You might learn something.
LOL, just kidding.
All private post secondary education institutions seek and accept tax subsidies.
Hillsdale shelters itself in 501(3)c, U. of Phoenix funnels and collects tax payer aid of students onto its income statement, etc ...
And no you ill educated idiot, the University of Washington is not a 501(3)c.
11. I stand corrected, UW is not 501(c)3 tax exempt, it is 115(1) tax exempt.
12. As usual, Mike BS, you are totally outclassed.
re 12: "As usual, Mike BS, you are totally outclassed."
You mean knowing the actual facts = being outclassed. Strange Days.
14. I suspect tuition increases have a high correlation to the growth in sutdent debt.
I didn't expect you to follow any links, read, or comprehend any of this either.
16. But let's give BS and dork credit for something. They give credence to the new thinking that not everyone should go to college.
17. Oh good. The somewhat trained chimp dorky d stops by to wipe his ass with his hand (note the lack of an opposable thumb!) and fling some poo. Now go back to picking fleas off your girlfriend's back like a good little bobo, dorky.
The whole point of the increase in debt that is related to student loans is the fact that the loans have been privatized; and, therefore, the original purpose of the loan has been transformed from providing a student with an affordable education to bilking the student and their family.
It never ceases to amaze me how your ilk can take a problem that YOU have caused and blame it on the government,
"Bush privatized govt's student loan programs, creating a new industry that squeezed $$$billions$$$ out of families and prospective students who were in the programs to begin with because they couldn't afford to borrow money the standard way at the standard rates. IOW, another banking ripoff. Obama has threatened to close the govt's privatization program, calling it "wasteful", as indeed it is. The response was predictable: industry lobbyists are gearing up to buy themselves some pols."
Go read and comprehend the post and its references. Continuing to cite Bush as your bogeyman really makes you look a lot more foolish than not knowing what you are talking about, because you did not bother to read.
And think about it for a second. Entering in to a loan is a choice. It may be a bad decision, like continuing to vote Democrat, but it is still a free choice and therefore becomes a responsibility. No matter how hard you Democrats try, you won't be able to protect us all from freedom.
Hillsdale provides potential students with links to these financial entities that privately lend federally guaranteed loans. Although Hillsdale mentions their privately funded loan program, I could find no link to them on their website. Also, the author of the article that you cite is a member of an organization that promotes private colleges - colleges that rely almost exclusively on privately offered federal student loans. Jeff, why don't you read things a little more carefully yourself before pronouncing judgment on others.
We are still waiting for your reading comprehension to kick in. The post is regarding the massive growth in public loans, and the corresponding inflation of tuition. (Hint, see the word "Federal" in the first paragraph.) Private loans and grants are not in question, nor are they a problem as they have existed for decades. There is no right to owning a car, home or a free university education. As with the housing bubble, the problems have occurred after Democrats have decided that federal loans should be extended to those who can't afford them, and who won't be able to afford them because there is no oversight between what a student is doing with the money and whether they might have a greater potential to pay back the loan upon graduation.
And I know this is shocking to you, but when one enters into a loan obligation on whatever terms, one is obligated to pay the loan back. If you sign up for a credit card at 20% rates, it's your fault, not George Bush's for taking on such high priced debt. And there is no obligation for anyone else to bail you out. Caveat emptor.
You are also apparently unaware of the difference between granted private financial assistance and private loans. Further there is no government connection between a private loan to a student from a bank backed by FDIC, and Hillsdale, no matter how much you wish it were so.
re 21: You are as thick as a brick. Read on and see if you can connect the dots between the private banks and the federal money and the Bush administration's role in externalizing the banks' risk onto the taxpayer.
This may be a novel concept to you, but public money should not be the piggy bank that private banks use to enrich themselves at yours and my expense.
Bush made it possible for PRIVATE banks to loan PUBLIC FUNDS to students with FEDERAL GUARANTEES on the loans which TOOK AWAY THE RISK inherent in a PRIVATE BANK, offering a PRIVATE LOAN to a private person.
Why is this so hard for you to understand?
The solution to the problem is for private banks to loan students money -- BUT NOT ON THE TAXPAYERS DIME. The solution is not to end all federal student loans.
I'm trying to be patient with you, but you are so obtuse.
23. Just challenge him with an either/or question Jeff B,... ask him to take a definitive HARD position on anything that doesn't comport with his spoon-fed Koolaid worldview ... he'll run like his pants are on fire.
24. All I know is if I could find a way to "short" student loans...I'd make a ton of money in the coming few years...
That's a separate issue than the one being discussed here, but since you can't seem to let go of that as a way to deflect, I will answer. Yes, it is wrong to allow private banks to make loans backed by public money, but it is also wrong to make massive new public loan entitlements. Both are wrong. Anyone who wants to go college should either work hard enough to qualify for a private scholarship grant or take out a private loan where they will be expected to pay back the loan. You are so obtuse as to have not read the reasons why public loans don't work. And now we have a bloated and overpriced university system where the value of the final product can often never equal the cost. Only in the upside down Leftist world can a once valuable commodity be so devalued by a flood of public subsidy.
26. The infuriating fact and dirty little secret about the bloated and overpriced university system is their ENDOWMENT funds. Harvard could pay the tuition of every single undergraduate enrolled on just the interest of the endowment fund. Same with ever whining/begging raising tuition UW. It's despicable. And it thrives under a public government loan system that drives up the cost of tuition while people like President Downgrade bemoan the same loans they subsidize that drive up the tuition. It's a dirty little never ending circle of POWER grabbing.
27. Inspiring story there. What occurred after? Good luck!
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Rag writes, "Harvard could pay the tuition of every single undergraduate enrolled on just the interest of the endowment fund."
Sure, if they wanted to violate legal contracts (since much of their endowment is restricted by the donors to specific purposes), have tuition jump up and down from year to year (since endowment performance varies wildly), and go broke (since maintaining the endowment in nominal dollars means depleting it in real, inflation-adjusted dollars).
Fortunately most endowment managers received their training in school rather than this blog.
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