COLLEGE LOAN PROGRAM
types of federal loan programs (subsidized loans, unsubsidized loans, and PLUS loans to parents). Why not have one simple grant program (Pell Grants) and one loan program? Sixth, these programs have contributed to a decline in quality in American higher education. Too many students of negligible academic promise (low grades and test scores) get federal loans and enter school, lowering average student quality. After teaching college for 55 years, I know that leads to dumbing down material to allow marginal students to be at least somewhat competitive. Grade inflation has soared with expanding student loans. The average American college student is less literate and knowledgeable than his or her counterpart of 50 to 60 years ago, spending far less time on academic studies.
Third, one thing the loan programs did do successfully was raise the demand for college, leading to increased enrollments. That, however, led to increased “underemployment” of highly educated Americans. In 1970, about one of every 150 taxi drivers had a college degree. The 2010 Census showed that number was about 24. I suspect it is higher today. Do you really need a college degree to be an Uber or taxi driver? A large number of college graduates, expecting a good job providing a comfortable middle-class life, are quite disappointed about their low paid employment... and owing student loan debts to boot. Fourth, these federal programs were sold as costing taxpayers nothing. It was argued that the federal government can issue bonds paying under 2% interest and then lend the money to students at a still-low 5% interest rate, making a modest profit (allowing for administrative costs). In reality, much of the loan money has not been repaid. Recently, a consultant to the U.S. Department of Education estimated that the losses expected from the current federal student loan portfolio is $435 billion – about 80% the amount of losses on subprime mortgages during the 2008 financial crisis. At a time when the most recent annual federal budget deficit equaled 14%, losses of this magnitude increase the probability that the U.S. soon will be viewed like Argentina – an irresponsible and risky place to lend money. Fifth, the federal student financial program is a confusing administrative mess, excessively complicated with multiple
At a time when the most recent annual
federal budget deficit equaled 14%, losses of this magnitude increase the probability that the U.S. soon will be viewed like Argentina – an irresponsible and risky place to lend money.
Seventh, it is probable that the sharp decline in American births in modern times at least is partially a consequence of debt-burdened students feeling they simply cannot afford having children. Families forego having kids in order to keep working to pay off debts, including federal student loans.
36
December 2020
Made with FlippingBook - professional solution for displaying marketing and sales documents online