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Government loans to students are the problem

June 5, 2013

A recent radio interview on the subject of government loans to students dealt with the potential of congress raising the interest rate, the huge amount of debt that students are piling up, and the problem of rising college costs. The statement was made that these huge student loans are a symptom of the much bigger problem of rising costs. This kind of thinking is completely backward. It is actually the government loans to students that are the cause of the problem. It is precisely the huge amounts of money that government is shoveling into colleges (via student loans) that is causing college costs to go up. The salaries of college professors, especially at public colleges, are almost as obscene as senior government officials’ pensions. It is not just the amount of the loans but the fact that there is no judgment exercised in the granting of them. Basically, all one has to show is that they are in college and the government will begin throwing money at them, even if the degree program the student is pursuing has almost no likelihood of landing the student a job that will enable the student to pay back the loan. No sane private lender would lend tens of thousands of dollars to a student to pursue a degree in women’s studies or ethnic studies or even some of the old liberal standards like sociology or psychology.

These obviously foolish practices must end. We should not just be looking at increasing the interest rate for student loans but rather abolishing this program completely and putting college funding back in the hands of people who can exercise the fiscal judgment that will return students and college administrators to economic sanity.

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