Who’s to blame for exhorbinant student loan debt?

Every so often some politician makes it their (brief) mission to address the burdens of overwhelming student loan debt.  Universally overlooked is that these students chose their institutes of higher learning knowing exactly what the costs of education would be.  They intentionally overlooked smaller, less prestigious schools such as State colleges or Community colleges — not to mention technical or trade schools — in lieu of high-priced universities with name recognition.  This recognition and prestige doesn’t come cheap.  But tuition fees are not a secret.  Everyone goes into higher education with eyes-wide-open.  The federal government isn’t blameless in the cost of college tuition and have aided in artificially inflating the cost of higher education by guaranteeing what ever the tuition costs may be.  Loans, being so easy to secure invite schools to inflate fees and entice prospective students to think of short-term schooling rather than long-term debt.

Add to that all the pie-in-the-sky students who choose fields of study that are of personal interest rather than financial security, this choice is destined to bring high debt with few prospects.  When people go to school for, say, 18th century French poetry, the specialties limit the occupations for which the degree would be valuable.  What can you do with a French poetry degree except teach French poetry?  Instead, a smarter choice would have been to study engineering, medicine, or some other science-based field for which there are endless job opportunities.  Too many people are educating themselves for pleasure.  Education is put to better use by studying for field that will be lucrative.  This is the root of many of the financial woes of students saddled with debt and no work to pay it off.

Because of high debt and low job prospect, activists on behalf of these financially burdened students lobby law makers to forgive or significantly reduce the principal amount owed.  You might even hear this championed by lawmakers themselves.  They might cite the bank bailouts from a few years back.  If you can bail out the banks — and GM, and environmental companies, etc. — then surely we should bail out students…right?  But they don’t seem to know what it is they’re asking for.  I suspect the kind of bail out the students and their advocates are looking for is a payment of loans on their behalf.  After all, the banks were defaulting and the government “bailed” them out, why not us, right?  Well, most people are oblivious to the fact that the bail outs for the banks were loans.  And they have been repaid…with interest.  So if what the financially irresponsible students are seeking is a bail out, they have already received it.

The student loan “bailed” them out of having to pay the university upfront for their education.  In essence they are asking for a loan to pay their loan — if they want the same deal as the banks.  What they actually want is money to be taken from the haves and handed over to the have-nots…themselves.

Banks — who are in business to make a profit — offer a service for a disclosed fee.  It is not the job of banks, or any business for that matter, to work or provide their service for free.  Businesses are not charities, and should not be derided for not acting like one.  I don’t provide my services free of charge to my employer, and neither do you.  Why not?  Because we work to make money, we strive to turn a profit.  So do businesses.  They rely on people honoring their informed commitments.  As soon as we demand businesses — banks, insurance companies, investment firms — to work for free, they will close up shop.

Comments

  1. brycelancaster says:

    Unfortunately, many kids aren’t educated about making proper financial decisions coming out of high school. A single financial literacy class taken in the ninth grade, (a requirement in my state), did NOT do enough to inform kids of proper financial decisions regarding school. It should be a simple concept not to take out more loans than you can afford, but so many of my classmates didn’t understand that concept. Some of them didn’t even know they HAD to pay it back, (I can only assume they thought it was a grant).

    Without getting into a discussion of socializing higher education, I think the simplest and perhaps most effective course of action would be to better inform students of the implications of college education. (And I say this from a recent High School graduate’s standpoint, we got NO advice on the situation other than to apply for scholarships).

    The problem goes beyond attending name-brand colleges pursuing dead-end degrees though. I’m in in a pretty cheap four year institution right now, (a step above a community college), pursuing a decently high-success career, (PR), and I’m still taking out loans. Taking the maximum number of credits coupled with working to pay off car, insurance, and housing bills means that I have to take out loans in order to keep my head above water. I’m praying that I’ll be able to get a decent job coming out of college, but with the job market the way it is for millennial’s, I’m extremely worried. I don’t think I should be blamed for my situation… I’m attending the cheapest in-state university pursuing a decent degree, but even with a good degree it’s entirely possible that I won’t be able to find a job. Cutting interest rates would, I think, be another good solution. Just to help those millenials who do everything right but can still get screwed over by our current economic situation. They then get stuck in a situation where they’re working well-below their degree and are physically unable to get out of student debt due to the high interest rates.

    • Bryce

      Have you ever heard any older people reminisce about having to work to pay for college as they went? You know why they did that? Because college wasnt so expensive that you couldnt afford it. You know why? Because there werent student loans. Sure you could get a personal loan, buy kids couldnt get them. The way the federal student loan structure is set up ruined the enterprise. Loans for college are very easy to get amd theyll give you essentially whatever the college charges.

      This leads to colleges charging anything because they arent on the hook for unpaid tuition, theyre paid up front. Youre on the hook.

      Eliminate student loans or reform them in a way where they only cover a portion, 60% say, and the costs would necessarily have to come down so people could afford it.

  2. brycelancaster says:

    That’s a pretty good scenario. Either way, through the government getting more involved or less, I don’t really care. What I care about is the fact that I have to somehow come up with 2000 dollars to pay for three online summer classes I want to take, (all of which have nothing to do with my major, just getting generals out of the way). Unfortunately, working our way through college without taking out loans is just not a reality anymore. Even after attending the cheapest four year university in-state, I’m still paying around 8,000 for just school. Working full-time at minimum wage gets you around 15,000 annually. That only leaves me only 7,000 a year for food, rent, my car, gas, insurance, repairs, and god forbid if I want to have even a semblance of a social life. Our higher education is definitely broken, but I never thought about taking out the equation of loans as a solution. I’d be interested to see if it would play out as you described. I could see the highest institutions becoming even more elite, but on a lower level, it could work out.

  3. brycelancaster says:

    I work on campus for the food department, which is minimum wage but free food so yay!

    And I know I have a lot of options, luckily my parents are helping me out with rent and the food that my work doesn’t give me for free. It works out enough that I’ll probably only have to take out eight to nine thousand in loans before I graduate with a bachelors, which should be easy enough to pay off in a few years. I’d apply for Fafsa, but my parents make JUST enough that I go over the line of eligibility. My situation isn’t ideal, but it’s bearable.

    My best friend is doing the exact same thing that you described in the original post, and it’s so frustrating! He has dreams of making it big as a director, so he’s going into filmmaking. (Which isn’t the most dead-end degree out there, but it involves a lot of luck in order to be successful). Not only that, he chose to go out-of-state to California, which has the highest out-of-state tuition prices in the country, (I might have to double check on that, but I saw his first semester bill and DAMN!). I’m like, “Casey…. you’re making all of us young college students look dumb!” haha. I really hope he succeeds after college, because I have no idea how he’s going to pay off hundreds of thousands of dollars in loans.

  4. See if your college accepts CLEP exams or ACE credit and get those summer prerequisites out of the way. Hell of a lot cheaper than $2,000.

  5. Bryce,

    You’re not in Danville, KY, are you?

  6. brycelancaster says:

    Nah, I’m a Utahn. Though originally I’m from Vegas, I’ve been here long enough for in-state tuition though. (Although the school system is MUCH, MUCH better here in Utah than Vegas. Holy hell, I don’t have to worry about being stabbed on a daily basis).

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