The leather-clad Nick Gillespie and Reason.tv take a look at why forgiving student loans is not a good idea.
1. They are voluntary. No one stuck a gun to junior's head and forced him to get a loan. Also, the terms of the loan are known to all vested parties. There are no surprises.
2. The loan amounts are not over-burdensome. Given the fact that the unemployment rate among college grads is half that of the national average, a starting salary of $50,000 (national average) paying down a loan at a clip of $290/month (national average) should not send you to squattting at your local Obamaville.
3. Bailouts are just not sound policy for banks, for students... for anybody. And this remains a great point of departure between the OWS set and the tea party. To hear some (many?) in OWS, it seems they are not so much chapped that Wall St. got bailed out as a matter of principle or poor policy but that they did not get their bailout as well.
There is a misplaced sense of nobleness in their assumed impoverished state that believes they "deserve" a bailout more than the "fat cats" of Wall Street.
The tea party has been consistent in that it is wrong to eliminate a moral hazard, be it in the financial sector or in student loans, where wealth and property are involuntarily confiscated in order to paper over the mistakes of others.
Bailouts do absolutely nothing in guarding against the eventuality of the need for more bailouts in the future.
H/T: Hot Air
Wednesday, November 23, 2011
Video clip of the day
Posted by Dean at 11/23/2011 07:38:00 AM
Labels: fiscal restraint, occupy, OWS, tea party, Wall Street meltdown
Gotta disagree here.
I don't think most recent college grads are starting at $50,000. I would guess that is heavily manipulated data, perhaps by self-reporting colleges trying to make their stats look better, or perhaps by not counting all those who can't find full-time jobs in their fields.
The reality today is that most four-year degrees in Grievance Studies majors and even in more serious liberal arts subjects are economically near-worthless.
The student loan debtors are exactly like subprime borrowers who bought ridiculously overvalued houses at prices they couldn't afford. Both the borrowers and the lenders were irresponsible.
The difference is that homedebtors can walk away from a house, while the Dirty Congress made student loan debt immune to bankruptcy, meaning student borrowers are literally debt slaves for life.
Just like easy financing created a bubble in home prices, easy financing created a bubble in college pricing. Get the Dirty DOE out of student lending, make student loans subject to bankruptcy again, and you'll quickly see education return to reasonable prices. No bank will lend someone $100,000 for a Grievance Studies degree when that student can file for bankruptcy the day he graduates. Colleges will have to provide value for the price they receive.
When college graduates need a bailout from voluntary loans, then we might as well start dropping money from helicopters and give wads of cash to everyone.
Mortgage and credit card debt have leveled off and/or begun declining.
Student loan debt is the regime's great hope to keep the US debt Ponzi going -- and it has recently passed $1 trillion.
This debt goes to feed bloated academic institution budgets and salaries (some of which then gets contributed back to the Democratic Party).
And have you read about the Obama regime's student loan forgiveness program? You make minimum payments for 20 years (or just 10 years for government workers!) and then your balance is forgiven! In other words, this is a huge amount of off-balance sheet debt: the government is committing to forgiving trillions in student loans in the future, with no explanation as to how it will pay for that.
The only wiggle room I see is to possibly "re-finance" these loans from 6-8% (or higher) down to what the average home loan is going for in the 3-4.5% range. But really, you signed your name on the dotted line, kids...time to pony up, regardless of how meaningless your liberal arts degree is in a society based on the the service industry.
As soon as people sniff that they don't have to live up to their obligations then that's how they will live their lives.
Post a Comment