Wednesday, January 17, 2007

Student Loan Solutions

The Democrats are pushing for lowered interest rates today, but that won't make much of a difference. Here's what would, in my opinion: Get rid of government-backed student loans. The reason? Colleges have inflated prices over the last decades mostly because they know if students and their parents don't have the money to pay, they can get big student loans. The student loan limits continue to rise and bam! so do college costs. Funny how that works.

Tuitions are rising an average of seven percent to eight percent annually, at least twice as fast as overall inflation, according to the College Board, the New York-based organization best known for admissions tests like the SAT. (Only inflation in health-care costs surpasses that.) care costs and college tuition. Two areas of commerce that the government keeps their big sticky fingers touching. Just more evidence of this truism: Whatever the government touches turns to shit.

Student loans benefit colleges not students. Get rid of them and colleges will be forced to cut costs and stop operating like big, bloated pigs. Innovation will ensue. Rather than inane book requirements for class, professors will have to be more selective and less capricious. Students won't be able to pay for every silly book on the list. They will have to change. There will be more at-home learning to cut costs. That's another good thing. In short, the colleges will have to start being responsible businesses instead of acting like, well, the government.


David said...

Suppose a student decides to start a business instead of going to college. He won't be benefitting from these deeply-subsidized loan rates.

This bill represents a subsidy of one class of people (a class which specifically includes college administrators and professors) at the expense of people not in this class.

Anonymous said...

...and I'm not so sure I want to subsidize millions of kids to go to university when they have no idea what they're doing there. Even though I'm a college grad it still rankles me that higher ed has this sort of halo around it, automatically. And students are always portrayed as "starving" and deserving of more aid. It's a little game everyone goes along with for their own benefit, as david rightly notes.

David said...

For more on the hypertrophy of college education, see my post An Academic Bubble?

Dr. Melissa said...

Hey David,

I went over and read it. I'm not sure a college education teaches much at all--depends on the student. The big thing is that a kid can't make a life without it unless they have an independent streak and an I.Q. to help them create a new idea.

People really are penalized if they don't have it. And it's getting increasingly important to have a masters or doctorate. The people aren't necessarily smarter, but they're disqualified from some jobs if they don't have it.

So families are forced to take on debt or don't have a ticket to success. And yet, the debt accrued almost assures a big percentage of those who have the debt won't succeed.

David said...

Note also that universities do not typically do a very good job of informing students about realistic career prospects in various fields.

I fantisize about a Sarbanes-Oxley type requirement for universities: a prospectus for each field that gives audited salary information for the field as a whole, plus specific salary information for the graduates of that particular university...all sworn to by the university president under penalty of perjury.

Dr. Melissa said...

Good dream, David. Was it AC/DC who sang Dream On?