Wednesday, October 26, 2011
Ron Paul and student loans
Ron Paul is right. The federal student loan program needs to go. Its hard for me to say that, being that I take advantage of the program myself. However, it's a system that does more harm than good for the students and society. There are a variety of reasons for this. One, it increases prices of tuition dramatically. Example...if the government gave everyone in America money to go buy a new type of vehicle, demand for those vehicles would go up dramatically, and would in turn increase the price of the vehicle. Basically, the people are getting a more expensive vehicle, but the actual value or utility of the vehicle doesn't go up. It's the same thing with education. When government gives away money that is extremely accessible to people to go to school, more people go to school at any one given time than what they would if they couldn't get the loans. This of course, leads to an increase in demand for school, and in turn an increase in price. Secondly, the taxpayers may not even get their money back. After 25 years, the loans are forgiven. One could easily rack up more than $100k in loans, and with low interest and very small payments, reduce the principal very little by the end of the 25 years. Obama is trying to make it 20, leaving the taxpayers with paying even more of the bill. Third, it keeps private banks from making money that could be in turn used to give more private student loans. It is really quite simple. The quality of education would be better, and cheaper, if the government wasn't involved.