Tom Woods: The Student Loan Racket: Ron Paul Right Again

[bobbyw24]

Ron Paul was asked about student loan programs, which have made debt slaves out of countless kids, in his excellent interview on Meet the Press. Here’s an excerpt from Rollback, my book from earlier this year, that amplifies his points:

We know all about the easy-money policies that lured people into crushing amounts of mortgage debt, but we hear less about how those same policies have encouraged impossible amounts of debt related to higher education, for undergraduates and graduate students alike – especially in the wake of the financial crisis, when the job picture for these students is so bleak. (Many of them have indeed found employment, to be sure, but not quite the jobs they were looking for.)

In early 2009, Forbes magazine told the story of Joel Kellum and Jennifer Coultas, who met at the California Western School of Law and were later married. When they graduated in 1995, their combined debt was $194,000. Each got a six-figure job. But even with one of them moonlighting, they managed to come up with only $145,000 in loan payments. That reduced the principal of the loan by $21,000. Just $173,000 to go.

http://www.tomwoods.com/blog/the-st...in/?utm_source=twitterfeed&utm_medium=twitter

 

[Sola_Fide]

Yep.

 

[bobbyw24]

 

[bobbyw24]

QE4: FORGIVE THE STUDENTS

Ellen Brown
October 20, 2011


Among the demands of the Wall Street protesters is student debt forgiveness—a debt “jubilee.” Occupy Philly has a “Student Loan Jubilee Working Group,” and other groups are studying the issue. Commentators say debt forgiveness is impossible. Who would foot the bill? But there is one deep pocket that could pull it off—the Federal Reserve. In its first quantitative easing program (QE1), the Fed removed $1.3 trillion in toxic assets from the books of Wall Street banks. For QE4, it could remove $1 trillion in toxic debt from the backs of millions of students.

The economy would only be the better for it, as was shown by the G.I. Bill, which provided virtually-free higher education for returning veterans, along with low-interest loans for housing and business. The G.I. Bill had a sevenfold return. It was one of the best investments Congress ever made.

There are arguments against a complete student debt write-off, including that it would reward private universities that are already charging too much, and it would unfairly exclude other forms of debt from relief. But the point here is that it could be done, and it (or some similar form of consumer “jubilee”) would represent a significant stimulus to the economy.

Toxic Student Debt: The Next “Black Swan”?

http://www.webofdebt.com/articles/qe4.php

 

[bobbyw24]

The Education Bubble

In the advent of the worst financial crisis seen in decades, there is much to be learned. Many economists agree that creating false demand will eventually create a bubble and crush a market much faster than the natural economic cycle. Take for instance the student loan market. Student loans, subsidized and unsubsidized, allow an 18-year-old to finance some or all of the next four years of his or her life, including living expenses. Morally, is it right to allow our children to start their lives immersed in debt?

In 1992, Congress increased the amount of money a student can borrow from the federal loan program with the reauthorization of the Higher Education Act. The act also enabled students defined as "in need" easier access to funding. Now we see student loans dominating the higher-education industry and accounting for 50% of all financial-aid packages.

According to FinAid.org, the average range of tuition inflation is normally 8% annually, and prices have not fallen or stabilized once since 1977, regardless of economic climate. In 2004, the Census Bureau released a report saying private university and college tuition are "up 93 percent from 1990." This symptom may be attributed to cheap and accessible money, and it is becoming an issue now because tuition is still rising but wages have been flat for a decade.

An MP3 audio file of this article, read by Steven Ng, is available for download at:

http://media.mises.org/mp3/audioarticles/4287_Donleavy.mp3

Rest of post:

http://mises.org/daily/4287#.TqZUfKoEL3w.twitter

 

[Monique]

Whenever government manipulates markets unintended consequences abound. Student loans are no different. As soon as government started guaranteeing student loans, tuition increased. How could it not? If you sold a product (education) and no matter what you charged for it, people could get it very easily, you too would increase your tuition. This is a very simple concept and yet, no one ever thinks about it.

The solution? Stop guaranteeing loans. Prices will come down because no one will pay for it up front. When prices fall more people will have access to education and fewer students will leave school indentured servants. I applaud Ron Paul for trying to point this out. Sadly, the country is so incredibly ignorant that all they can hear is \he is trying to hurt students when the opposite is true.

I disagree with the post above that suggests that people who have agreed to take on debt should be allowed to damage the entities that gave them that money. I have two basic life principles as noted in the Uncle Eric books: do all you agreed to do and do not encroach on others. Paying your student loans back falls into the "do all you agreed to do" category. Since when is it ok to break your agreements? And who do you think is going to pay for all this? Certainly not the banks. Somehow, somewhere, all that lost profit will come out of my hide. It always does. I will pay more for loans, or my credit card fees will rise, or they will just take another bailout from the government and I will pay more for groceries, or skip the bailout step and have the government pay off the loans directly...again I pay more for groceries.

There are unintended consequences when you try to manipulate markets too.

"Morally, is it right to allow our children to start their lives immersed in debt?" By the time a person is able to sign for their student loans they are not children. Are we going to stop adults from making choices? What if I said I don't think it is right that homeowners are immersed in debt? or credit card holders? Heck, why not just say that humans shouldn't be morally allowed to be immersed in debt? Forgive all loans! Everyone gets to be a thief!! Yay! Oh, wait, is it morally wrong to steal? Translated that sentence means: Wah!! Why isn't everything free? In practice that sentence means: No bank in the world will offer anyone in college a loan for anything if they aren't going to have to pay it back. Same reason no one will sign a contract with a minor. Effectively, the age of consent will simply rise to 25 or 30. Can't they see the unintended consequences of their demands?

 

[Monique]

"The economy would only be the better for it, as was shown by the G.I. Bill, which provided virtually-free higher education for returning veterans, along with low-interest loans for housing and business. The G.I. Bill had a sevenfold return. It was one of the best investments Congress ever made." This might be one of the biggest lies ever told.

 

[ZanZibar]