Americans need to wake up and stop the enslavement of our children to the Federal government. Student loans are creating a generation of indentured servants and they are a back door entrance for a gov’t takeover of our private economy.
The government is causing the price of college to be artificially high, just like they did for houses. That causes everyone to overpay for their education, whether they take out loans or not... and it’s a bad thing.
By flooding the education market with an unlimited amount of easy-to-get funds, the GOVERNMENT has caused the cost of college to skyrocket, while the quality and value of a college degree has gone down.
Keep in mind, it’s NOT the free market at work here. Even if the loan is taken out through a private, for-profit lender, many times the student loan debt is guaranteed by the federal gov’t (through Sallie Mae)... and that gov’t guarantee is what encourages way too much lending... just like what happened with those $500K houses that were really worth $250K.
Colleges have continuously lowered the bar in order to enroll anyone and everyone who can write their own name (not really required) and who can get a student loan... that keeps the funds flowing through the doors... all of this destroys the value of a college degree.
That means that millions of students are taking out billions of dollars of loans in order to overpay for an inferior product. Like any other product, if people saw a value in it, they would be willing to pay for it. And if they demanded higher quality education for their money, the schools would have to improve their product in order to earn their business.
We have simply gotten into an entitlement mentality over the last 70 years and that is why people no longer have the will or the discipline to save up for things like college, a down payment for a house or even retirement. They expect the gov’t to give it to them or support them from cradle to grave.
Just as they facilitated the housing bubble, the gov’t is facilitating a higher-education bubble by insisting that everyone has a “right” to go to college and that students should have access to unlimited easy-to-qualify-for federally-guaranteed student loans. Sound familiar? Did we learn nothing from the housing bubble?!
Student loans can be just as toxic as any other type of debt that we are constantly vilifying these days. The student loan tab is over $730 billion and growing! These loans are basically no down payment, bad credit no credit ok, no income documentation-required loans with an unlimited credit limit. Isn’t that the definition of predatory lending?!? Except in this case, YOUR LIFE is the collateral for student loans.
If people had to save up their hard-earned money in order to pay for college (even if they only paid for half of it upfront), they would be much more careful about the price and the universities would have to raise the quality of the education in order to compete for those hard-earned dollars. The cost of education would plummet and the quality would skyrocket if the gov’t would let the free market forces work!
But no, they won’t do that. Instead, the gov’t is loaning kids and their families tens of thousands of dollars (sometimes hundreds of thousands of dollars) in federally guaranteed student loans without any regard for their ability or inability to pay them back.
This easy-to-get money is driving the cost of education through the roof, while driving the quality of education into the ground (Dr. Thomas Sowell’s book, Economic Facts and Fallacies, is worth the price of the book just for the chapter on the damage that student loans are causing to our higher educational system). And universities and tenured college professors are laughing all the way to the bank.
Unlike an underwater mortgage though, you don’t get to “walk away” from student loan debt. More than any other debt, it is next to impossible to get out of re-paying federally guaranteed student loans... they practically cannot be discharged in bankruptcy and you have to be almost completely disabled to have them forgiven.
Defaulted student loans can stay on your credit report INDEFINITELY and destroy your credit scores for many years. You cannot get an FHA or VA loan if you have defaulted gov’t student loans. Most states and gov’t agencies will not allow you to get certain types of licenses if you have defaulted student loan debt. The gov’t will garnish your wages and confiscate your tax refund in order to get it’s money back for student loans. (I think people have a responsibility to re-pay loans, by the way. I am NOT for walking away from any kind of debt.)
The most evil part of all is the government’s offer to “forgive” the debt in exchange for years of “public service”.
Imagine how hard it will be for a kid who is tens of thousands of dollars in debt, who holds a worthless college degree in his hands and has very few prospects for employment to turn down a job with the Federal government, who is willing to pay him twice the private wage rate and give him unbelievably generous benefits and allow him to retire at an early age with a pension.
There is no way he will be able to turn that offer down... like an offer from the mob, it will be an offer from the gov’t that he simply can’t refuse.
There is also no way the private sector will be able to compete for the best workers against a gov’t who pays double the average wage and forgives all of that debt. So, private companies will go overseas to find workers, which will make finding a job even harder for non-government workers... what a vicious cycle!
A pure, truly free market would have never allowed the current crisis we are in to happen. It was caused by many, many years of gov’t intervention and free market manipulation, which led to an entitlement mentality.
Peter Schiff explains it better than I ever could. Forward to 6:00 minutes for his argument specifically regarding gov’t manipulation of student loans and debt forgiveness programs.
http://www.youtube.com/watch?v=u7skTzAkmUE&feature=channel
(that is just one of many of his video blogs where he has talked about the negative unintended consequences of gov’t student loans and loan forgiveness programs... they are bad regardless of what the income limit is. Thomas Sowell breaks it down brilliantly in his book “Economic Facts and Fallacies”)
The recent “defend education” protests expose the real agenda behind the government’s push for “free” education for everyone. It was sponsored by practically every Socialist, Communist and Progressive group in the nation. The website looks like something straight out of Lenin’s Russia. Mind control is what this is about (and lining unions pockets in the process).
http://www.defendeducation.org/
It is much, much more than just a way to finance education... it is a way to fundamentally transform America into a Socialist/Communist nation.
We have to stand up to this and protect our children, right now, or we are going to lose the fight for America’s soul.
“By flooding the education market with an unlimited amount of easy-to-get funds, the GOVERNMENT has caused the cost of college to skyrocket, while the quality and value of a college degree has gone down.”
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Ain’t that the truth!! The typical graduate of a public high school fifty years ago, even one who didn’t take the college prep classes, was vastly more qualified to enter the work force than most recent college graduates. We have people with master’s degrees walking around without much of the knowledge that used to be required of students in the eighth grade.