Comments on: How Student Loans Helped Destroy America

By: Mike Hunt

Mike Hunt — Sat, 29 May 2010 01:50:04 +0000

Ben,

The word “commodity” does not mean what you think it means.

By: Sooke

Sooke — Mon, 17 May 2010 20:32:30 +0000

In Canada, student loans can’t even be discharged by declaring bankruptcy. It follows you to the grave.

By: Alan

Alan — Mon, 17 May 2010 17:45:40 +0000

It a shame that such a serious issue has to be so childishly presented. This does not help convince anyone who isn’t on board already.

Colleges are drowning in money and have no obligation to produce anything at all. This situation must be remedied in some way, either by competition (good idea) or legislation (bad idea).

By: Ben

Ben — Mon, 17 May 2010 17:03:58 +0000

Your diatribe against colleges is populist bunk. Colleges offer a valuable commodity. Like anyone who has something to sell, schools charge whatever the market will bear, as they should. The problem (as you somewhat cover) is that easy student loans have made people willing and able to pay almost any amount of money to attend. Put it this way: Even as high as tuitions are, most good schools still turn away a huge chunk of prospective “customers” in the application process.

But look, the colleges are caught in a trap, too. It’s not like the professors are swimming in money. All those tuition hikes have in turn fueled an arms race between schools to remain competitive. The building booms on campuses across the country have been amazing: Everything from academic buildings and labs to student life centers, “diversity” centers, and luxuries galore (food courts, state-of-the-art fitness centers, etc.).

Capping tuition will do nothing but cause an artificial shortage in higher education. Just look what happened when Nixon capped gas prices. Price caps always lead to rationing.

By: dusty

dusty — Mon, 17 May 2010 16:50:14 +0000

In the US, it is virtually impossible to practice as a lawyer in any state unless you graduated from an accredited law school. This is nonsense – anyone who passes the state’s bar exam should be allowed to practice law. If the bar exam is too easy, make it harder (and fail more law school graduates). The incestuous relationships between legislators, law schools and bar associations are clearly illegal trusts. Likewise the trusts between colleges and their accrediting bodies.

By: P Bradley

P Bradley — Mon, 17 May 2010 16:08:29 +0000

You fail to point out that the loan programs have multiple repayment plans that can reduce the montly payment to as low as $5 a month and forgive (cancel) the unpaid principal after 25 years of payments. Also, borrowers can have unpaid principal reduced when they work as teachers or in public service. who work as teachers. The standard repayment plan is minimum payment o $50 or a 10 year term. The other options are: Extended, Graduated, Income Bsed, Income Sensitive and Income Contingent.

Student loan repayment is reported to national credit bureaus. To stop making payments for 90 days would negatively affect a borrower’s credit score and his/her ability to purchase a house or car.

The focus of your article that higher education costs are fueled by increases in the maximum amount a student can borrow and his borrowing the maximum amount. What percentage of a university’s costs are paid via tuition and fees? Other factors contribute to increased in tuition. Has the state legislature funding to higher education kept pace with inflation? Are schools taking appropriate measures to reduce costs? A solution involves much more than a ceiling on student loans–the current economy, Congress, state legislatures, higher education administrators, and students.

Our current problem: A downturn in the economy causes more students to enroll (5-15% increase in my state)…increased classroom expense when state funding has been reduced by 10-15%.

By: Jim Stegman

Jim Stegman — Mon, 17 May 2010 14:27:39 +0000

I have an easy solution to this problem… The Universities should offer the loans, not the U.S. Government. That way, they carry the risk as well as the benefit. Then they will make sure that their investment dollars are spent wisely, to ensure that they will get their loans paid back.

By: Andrew_M_Garland

Andrew_M_Garland — Mon, 17 May 2010 05:46:14 +0000

You wrote: “Imagine how the American economy would have benefitted with an extra $1/2 trillion over the past forty five years – or at least 90% of it, had tuition fees been kept in line with the cost of living.”

College may be (and probably mostly is) a bad investment, but your economic insights are wrong.

Look at it this way. If you were correct, than ALL loans would be disastrous, because future loan repayments would cut into future spending, sinking the future economy!

In reality, a loan is only a transfer. It allows a student to pay his teachers today for an education that is supposed to increase his productivity tomorrow. He will repay the loan out of that increased production and value, tomorrow. His teachers can buy more stuff today and remain employed.

The only question is whether college is a good investment, loans or not. I think it is usually a bad investment, and its increasing expense makes it a worsening investment. Students suffer from this bad investment by ending up with less material wealth, because their productivity is not increased by as much as the cost of the education.

Worse, their productivity is not increased as it could be by a practical and useful education at a reasonable cost. We all suffer somewhat from their missed opportunity to learn something useful rather than something of high status.

What is the actual value of a college education, after correcting for the following effects?

(1) Colleges select for high IQ
(2) Businesses select for IQ by requiring a college degree for executive-track training.
(3) There is a cultural belief that a person cannot succeed without a college degree, limiting the success of non-graduates.

Employers and schools often dismiss the value of earlier college training, even in the case of future doctors and lawyers. The college education is regarded as an indication of dedication and interest. But, the employer or graduate school implies that the student should “forget what you have learned” and start to learn the real subject, if he can.

So, a college degree may be valuable mostly because of cultural bias, the lack of a more efficient and cheaper alternative, or the prohibition against employers giving aptitude tests (from supreme court rulings). How much does the “learning” in college really matter?

People mature from 18 to 22 while in college. Most mature in their discipline, outlook, and knowledge, but I think that has little to do with the college. Colleges are happy to take credit for the advancement of some, while writing off the failures as “not doing the work”.

College is an Expensive IQ Test
http://easyopinions.blogspot.com/2008/07/college-is-expensive-iq-test.html

By: anon

anon — Mon, 17 May 2010 05:31:10 +0000

I was responsible and went to a cheap college and graduated sans debt. So if the gummint gives everyone $85,000 who went to a $25,000 a year private school to get a degree in education and weren’t smart enough to realize what a bad investment they were making, do I also get rewarded with $85,000? Or does your idea only reward those who made stupid decisions?

By: Half Canadian

Half Canadian — Mon, 17 May 2010 04:57:08 +0000

“If everybody with an outstanding student loan, failed to make payments on it for the next three months, do you think somebody might take notice?

You are the next generation of law makers. This is your responsibility.”

Seeing as I took out the loan, it IS my responsibility. So I’m going to pay it back.