Student loans-the liberal mindset in action again

There is little doubt that the price of a college education is out of control. It is at least questionable whether we receive equivalent value for that expense. It is also pretty certain many colleges have a great deal of potential for more efficiency and productivity and hence the ability to better control their costs.

The problem with higher education is the same as with health care, we have a greater perception of value than is real and we equate cost with quality. Hence, we care only marginally about the cost versus benefit.

Enter the liberal mindset. Ignore the fundamental problem and instead make it easier for more people to use a flawed system regardless of the value received or who pays.

But then there is the political motivation. What better way to garner votes of the younger generation than to ply them with cash, and for good measure add an additional bonus if you work for government?

What we are doing is simply giving people less reason to care about the cost of college, less reason to focus on degrees of importance to the US and its competitive position in the world; STEM related degrees.

More than 40% of college students don’t finish in six years, and in 2012 45% of those who did graduate had jobs that didn’t require a degree, according to Federal Reserve data.

Bloomberg.com June 10, 2014

Jennifer Day spends 12 percent of her monthly take-home pay on debt that funded a master’s degree in urban and regional planning, money she’d rather be saving toward a home.

“I spend $364 a month for student loans,” said Day, 33, who conducts market research for the hospitality industry at a consulting firm in New Orleans. “To me, that is a down payment or ultimately savings down the line.”

So taxpayers are to subsidize a master’s degree in urban planning for someone who works for a hospitality company and who has a loan payment equal to a car payment?

Mary Kate Brunell said she has a good job working for a government contractor in Washington, yet said she’s constrained by the $108,000 she carries in student debt, mostly for a graduate degree in public administration from Columbia University in New York.

Her largest single loan of $45,000 at an 8.5 percent interest rate is killing her ability to move forward, Brunell, 31, said.

“You can get a mortgage for half of that interest rate,” said Brunell, who wants to pay off her debt before starting a family. “It definitely impacts decisions, big and small.”

“While I don’t regret the decision to go to school, my student loans constitute long-term financial slavery,” Brunell said. “I don’t think any 18-year-old is fully prepared for the daily impact of actually paying them off.”

I’m glad she doesn’t regret the decision to go to school, but too bad her own decisions have put her in “slavery.” You mean like a mortgage? She shouldn’t regret paying her debts either. The good news is that as long as she doesn’t want to start a family, her birth control is “free.”

Wall Street Journal June 10, 2014

Specifically, Mr. Obama announced an expansion of the burgeoning disaster known as his Pay As You Earn program. This gift from taxpayers caps monthly student-loan payments at 10% of a borrower’s discretionary income, regardless of how much the borrower owes. Even better, the borrowers have their debts entirely forgiven after 20 years—or merely 10 years if they work in government or nonprofits. Those who work outside the profit-making economy don’t even have to report the forgiven loans as income.

The process is not as simple as the WSJ makes it appear, but the point is accurate. If we are going to use taxpayer money to fund college based purely on individual choices, it seems there should be some reasonable criteria. For example:

1⃣ Limit or otherwise adjust the benefits based on the degree earned with greater benefits going to STEM degrees

2⃣ Require the student to graduate with a completed degree in four years or standard degree period

3⃣ Adjust the benefit to reflect grades achieved during college

4⃣ Stop encouraging working for government and instead direct the tax-free benefit to the most critical American industries and professions.