Posted on 10/30/2011 1:32:44 PM PDT by Kaslin
One of the great things about America, President Barack Obama told students at the University of Colorado, is that no matter how humble your roots, you still have a shot at a great education. He also told students that his goal is to "make college more affordable." Alas, the president's prescription for making higher education affordable seems likely to yield the same results as his plan for curbing health care costs; that is, it is likely to drive prices higher than inflation.
The nation's next fiscal nightmare may well be a higher-education bubble.
Americans now owe more on student loans than on credit cards. As USA Today reported, America's student loan debt is expected to exceed $1 trillion this year. Rising costs have left many graduates in a deep hole. Many of last year's graduates walked away with a diploma and, on average, $24,000 in student loans. The default rate on student loans rose to 8.8 percent in 2009.
Occupy Wall Street activists have been calling for forgiveness of student loans. Congress already passed legislation proposed by Obama to cap some student loan payments at 15 percent of a graduate's discretionary income and to forgive the balance after 25 years. On Thursday, Obama pledged to lower the cap to 10 percent of discretionary income -- with forgiveness after 20 years.
What next, 5 percent and 15 years?
"And we can do it at no cost to the taxpayer," U.S. Secretary of Education Arne Duncan cooed in a statement.
"That is simply not true," responded Neal McCluskey of the libertarian-leaning Cato Institute. Taxpayers are on the hook for those loans.
Last week, McCluskey put out a paper that concluded that when government bestows more aid, institutions benefit far more than students. The College Board figured that real average tuition rose some $5,500 for public colleges and $17,800 at private institutions from 1980 to 2010, while total student aid increased comparably, by $8,165. The phenomenon predates this administration. The College Board reports that for the past decade, college tuition and fees have exceeded inflation by 5.6 percent a year. That's where McCluskey believes increased financial aid goes.
"There is no question," McCluskey wrote, "that colleges and universities have been raising their prices at a very brisk pace in recent decades, and that those increases have largely nullified aid increases."
Rush Limbaugh delights in blaming the rising price of higher education on "greedy academics." Look at the salaries that California's public universities pay administrators. The new Cal Poly, San Luis Obispo president is about to take home $50,000 more than the published maximum salary of $328,212. With federal and state student aid dollars feeding the beast, eggheads cash in.
The biggest losers are students who get sucked into colleges, because the federal loans look like free money, only to drop out of school. They get the debt but no degree. As McCluskey observed, "we give money regardless of their aptitude to do college work."
The other losers are graduates with six-figure debt and little income. The White House is working on a "Know Before You Owe" project to warn students about the cost of student loans.
As a beneficiary of a state university education and a repaid student loan, I don't want to end a program that helped me and can help others. But as with mortgages that fueled the housing bubble, there can be too much of a good thing.
The unintended consequences of the steep rise in government financial aid, McCluskey concluded, may well be "sky-high noncompletion rates and rampant tuition inflation."
In his 2005 Stanford University commencement address, Steve Jobs explained the economic factors that went into his decision to drop out of Reed College. "I naively chose a college that was almost as expensive as Stanford, and all of my working-class parents' savings were being spent on my college tuition."
He actually thought about the money; that sounds so quaint today. I am not suggesting that anyone drop out of the right school. I just want graduates to look back at their education and know in their hearts it was worth it.
Barry is an idiot. There is no such thing as a “great education” in this country anymore. A great diploma (tuition receipt) in Bitter Women Studies maybe but not a “great education”.
first bush 43 and obama bailed the unions at gm and chrysler,
now obama wants to bailout indebted college students.
And the student loans come from whom exactly???
If they forgive student loans, I want it retroactive to the 1970s at the very least.
That's the bottom line. We have to pay for their decisions.
One thing I'll remember about the Obama years will be feeling stupid for paying my bills on time.
If most of these students would use their loans to attend a trade school where they could actually be prepared to get a job, I’d be fine with them.
A good trade school can teach you to be a plumber, electrician, chef, or any number of things that the public needs.
My bet is that most of the students taking out loans are studying in majors for which there is very little use.
Exactly
Useless liberal arts studies. Two years of a CC then a trade school or engineering school.
Just another perpetual give away to colleges/universities and their interconnected interests, at our expense. Tuition costs will NEVER go down as long as money so freely flows from us tax payers into these institutions.
At this point, we would be just as well off to totally socialize ‘higher learning’. Funny how this is the only area of the economy the liberals at these places don’t advocate being taken over by the government(because they are living quite comfortably, or becoming rich off of it).
I posted last month, somebody needs to hang a large banner in the OWS area:
“Borrowing 100 grand to attend a name college to get a degree that qualifies you to work at Starbucks is stupid.”
I posted last month, somebody needs to hang a large banner in the OWS area:
“Borrowing 100 grand to attend a name college to get a degree that qualifies you to work at Starbucks is stupid.”
My kids all celebrated the day they made their last loan payment .. too bad barry wants to steal that sense of completion from others
Forget retroactive. I want mine now, so that I can have it forgiven.
I worked my butt off to pay my way through college, and graduated in the late 70's recession with an engineering degree and no debt, and multiple job offers.
I want to be able to party instead for 4 years, sleep through classes and get a useless degree, then complain because I can't get a job that doesn't require any real effort. Then, I'll go hang out with my friends, errr... "protest" and have my debt paid off by taxpayers.
I'll suggest another banner:
Spread the meme....
“. A great diploma (tuition receipt) “
Wow. That is the best description of a diploma I’ve ever heard! Colleges once were accused of being diploma mills but now they are just money mills and those diplomas are nothing but Tuition Receipts.
The requests were made just prior to the 2008 elections and hustled through with no rhyme or reason. President Bush conferred with Obama prior to signing the bill. Had Bush vetoed, the Congress had enough to veto and push it through anyway.
“Just another perpetual give away to colleges/universities and their interconnected interests, at our expense. Tuition costs will NEVER go down as long as money so freely flows from us tax payers into these institutions.”
“At this point, we would be just as well off to totally socialize ‘higher learning’. “
They are well on their way to that. Debt slavery for the middle class schmucks that save or work their way, and the free ride to Ozero Zombies. The coming generations won’t have the freedom to learn if they are capable or smart. The party, meaning the liberals with a choke hold on the colleges, will decide who is worthy.
If after 20 years you still haven't paid off your student loan, you should surrender your diploma. And your employer should be made aware of this and have the option to terminate you without cause.
And fair is fair - if I, as a taxpayer, have to pay for your college, where's MY diploma?
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