I don’t care if you are on the left or right here… I don’t care if you’re in outer space. I think everyone can read this and understand the US has a big problem. I’m not insane – I know I don’t have a good solution. But I am a maniac and have a TON to say on this subject…
Now, I have actually ZERO clue if I have already ranted on Water Cooler Sports about this – but this is a real problem with our country that no lawmaker, politician or anyone really wants to tackle… Because the solution is simple – no more “education for all” in this country.
Am I a bad guy for saying that? Maybe. But humor me and continue reading.
I don’t know when exactly this started (W, Clinton, HW, maybe earlier?), but students loans are essentially available to everyone. If you can’t go to college on a scholarship or some sort of grant, then you have to resort to student loans to tackle that ridiculous debt… and virtually everyone has to do so.
Okay, so pretty simple right? A $20k per year bill just gets put on layaway and you’ll deal with that bill when the time comes… Well, 4 years fly by – you get a job and you have real responsibilities and paying that $80k back can be hard. I struggled myself living paycheck-to-paycheck in a commission only job paying my first few loan payments.
For the record, I have no problem with the idea of paying the loans back. Shit, I know I owe my college money. Money I “spent” during my years at school learning (or should have been learning). Does it suck? Sure! Does paying for a financed car suck too? Absolutely! But you trade those loan payments for the immediacy and the privilege to go to school… or in the other example, drive a new car.
Here’s where the wheels came off the fucking tracks (in my opinion). Colleges jacked the price of college up, year-after-year… And why not? We kept “paying” it with student loans. We agreed to pay it back, and kept taking out loans, so why wouldn’t they jack their prices up?
Look at the below graph of how fast student loans have risen over the years versus other expenses:
“OMG! THAT’S SO UNFAIR! WTF!?”
I agree. But the rest of those “goods” aren’t available through loans that EVERYONE can get. Not everyone can get a house if they can’t afford it (trust me, I’m going through it right now). Yes, medical coverage has risen significantly, buuuut it pales in comparison to student loans because we don’t give it out for free*.
Now, before I get to my next point, I want to quote one of my favorite law professors Dan Arno from Le Moyne College:
“YOU KNOW WHAT HAPPENS TO PIGS?! THEY GET SLAUGHTERED!!”
Colleges had it good for YEARS. They charged a significant amount for their services (the services which we all loved) and everyone seemed to be content paying them back. Then, they realized the opportunity they had with everyone having access to student loans.
These colleges could charge WHATEVER they wanted, and kids will just continue to take loans at WHATEVER price it costs them? Colleges began to see exorbitant amounts of revenue coming in – and I’m sure their bottom lines look GREAT. Now, quick note, it doesn’t matter if it’s a loan or not to the college because – the student loan company put the money in the hands of the college! Pssh, the student loan company has to deal with the student to make sure he/she pays it back. They can deal with the problem of these kids not paying anything back!
So, these colleges did what every capitalist on the planet would do – they milked the cow for all it’s worth and kept increasing the cost since the consumer (students) continued to “pay” for it (student loans) regardless of the rising costs.
But we eventually are going to hit the end of this road… Or maybe we’re about to hit it.
In the financial crisis in 2008 with subprime mortgages, people had so much housing debt that they simply couldn’t pay back (Why? Because EVERYONE could get a mortgage for ANY house). Well, we are running into a similar issue with student loans right now.
Just this morning in the Wall Street Journal, they were saying how hundreds of thousands of borrowers were delinquent/defaulting on their student loans. And of course they are! The cost of education has risen too high leading to an absolute impossibility everyone could pay them back.
So, here’s my prediction: As more and more people default on these student loans**, the student loan companies will need to be “bailed out” by the government (a practice that is not new when considering fully guaranteed students loans, but those ended in June 2010).
But that‘s not the concern. The concern should be this: when the student loan companies, OR legislation, get smart and make student loans NOT accessible to everyone with a pulse – college prices will have to return to Earth. When the inflow of ridiculous tuition revenues thereafter cease at colleges, we are going to see COLLEGES start to bear the brunt of this.
Yes, we’ll probably see the end of what has seemed like a decade of awesome improvements on every college campus in the nation. We’ll see professors’ and administrations’ wages freeze, job freezes/cuts and (if they have them) their pensions will be in trouble. We won’t have this la-la land of college as we currently know it.
Again, I am not a genius and I don’t have a pretty solution. My solution leads to real people with real problems and a HUGE hit to an industry that has created tons of jobs and given people who otherwise wouldn’t have had the chance an education and a chance in this world.
I’m open to any and all thoughts on this. This is about the exact opposite of a joking post like this site is used to, but it is fucking 100% real.
Stay Woke (I Guess),
* = My argument for “free” healthcare can be saved for another day.
** = The note I referenced. Many of these loans will be defaulted on. How can I be so sure? Well, there is no “due diligence” done to find out if the borrower (18-year old student) will realistically be able to pay it back. What do I mean? If a kid goes to school to be an art major, but is going to school 100% on loans – DO YOU THINK that’s a good person to loan $100k or $200k to? I’m not saying loans should only go to certain majors necessarily, but there needs to be a better (or any) vetting process to determine if these loans could ever be paid back. There has to be some sort of recognition to the fact that if art majors (and such) NEVER pay these loans back, the government is on the hook for the fugaze money that was created by these student loans, leading to? MORE NATIONAL DEBT. I get that the national debt (just shy of $20 trillion if you’re wondering) is a WHOLE other topic, but the above note needed to be mentioned here. Huge tangent. Sorry I couldn’t find it in the above article more fluently. The problem is just that the way they’ll have to handle the amount of delinquent borrowers is taking away from other programs (i.e. social security and other benefits) OR they increase taxes – plain and simple.