You’re Getting Bukkaked By Student Loans And There Is Nothing You Can Do About It

TFM Finance Guy9 years ago

The current system for education in America is broken and I’m going to fix it. First, some background:

In 2008, the United States faced a massive mortgage crisis. In the aftermath, we saw regulation after regulation put into place to reign in “sub-prime” loans, or loans issued even though the lender knew the borrower would have trouble making payments. These regulations have worked swimmingly! Mortgage, credit card, auto loans, and default rates have dropped significantly. The problem: Government issued student loans have skyrocketed since 2009.

We are currently getting gang-banged by the schools and the government. Here’s the cycle: The schools raise tuition to build a sweet new administration building and hire 50 administrators, then the government issues more student loans which increases interest revenue. You see what is happening? Both parties get paid more the higher tuition gets. Meanwhile, students are getting Eiffel towered in the middle. Everyone, Democrats and Republicans, can agree on this.

This is where Bernie and I part ways. I want to reign in student loan issuance. It’s time to divest from higher education. Eventually, and maybe it takes two to four years, a decrease in revenue hits universities’ income statements. Then, to remain competitive, they are forced to lower costs. Maybe it’s more online classes or less wasteful administration. Obviously they still need six figures for their four-star quarterback recruit, so it still won’t be free. However, as schools fight for a smaller chunk of revenue, prices will fall.

My point is, Bernie, that tuition cost is going to increase until you stop writing universities a blank check. My second point is that divesting from student loans would cost the government billions in annual revenue. Fuck. I guess we just wait for this bubble to burst and the economic crisis that comes with it. In the meantime, I guess we just blame the banks?.

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