This is a blog entry I wrote in 2007. I am re-posting it here, along with some other entries from my old blog.
Today congress trying to come up with more ways to make student loans easier to get, cheaper, and in higher amounts. They cite, among other things, the huge increases in college tuition costs. The irony, by trying to fix this “problem”, they are only exacerbating the problem. However, like so many other government problems, no one will challenge this for fear of losing their power and influence. We need to remember we should only elect people who will do the best for our country, not self preservation.
To vote against this bill a congressman is going to be called “anti-education” or be characterized as someone who does not think everyone should have equal access to higher education. However it is the congressman that votes against the bill that is giving lower income people the chance to afford an higher education.
This is simple supply and demand. If anyone can go to college, regardless of cost, then more than would normally attend will attend. A college, or any institution, has a finite capacity at any given time. If more wish to attend, then the university must increase the capacity. To do this, buildings must be built, professors must be hired, janitorial staff needs to be found, land may need to acquired, and all of the support that goes into a University must be expanded accordingly. As I am sure you can imagine none of these items are free. When increasing such a capacity, the prudent plan is to expand beyond current demand and have room for future growth with minimal future expenditures. These never ending projects cost money and therefore tuition rates rise. The government is artificially inflating the demand for the these expansions. Not everyone can/should go to college. I imagine there are students at universities who would not be there, and should not be there, but are there only because of federal loans or state lottery grants.
Education is like any other product. The higher the demand, the higher the price. What if the government did this same trick to BMW’s? Imagine if congress decided BMW’s are the safest vehicles available and traffic deaths would be cut in half if everyone owned one. Oddly, not everyone can afford a BMW. To help all of our citizenry own one, congress is going to co-sign any an all loans for BMW’s, regardless of credit worthiness. If the law goes into effect on April 1st, it is reasonable to assume BMW lots are going to be quite busy. Here is the problem; not everyone needs a BMW. Some of the buyers have cars that work just fine. (just like some people have jobs that are fine, and do not require further education). Some buyers who were planning on buying a cheaper car decided to upgrade to the new BMW. (Some students may have wanted to work in an apprenticeship program or go to a technical college). Still others, who just bought a new BMW a couple of months ago can’t wait to get another one, and since there is no up-front money out of pocket, take the opportunity. (How many double majors in Political Science and Human Resources do we need).
What the government is doing with higher education is the same thing. We are creating demand where one would not otherwise exist. In the interest of full disclosure, I paid for my higher education with both student loans and savings, the majority of it with federal backed student loans.
I agree, as a society, we benefit with a higher educated populace. I also know there are those that need this help, and without it may never get the chance to go to college. But there should be some limit. Some criteria in giving these federal loans. When I applied, my credit rating was poor, my high school record was average at best, and I had nothing invested into my college. It took about 1 hour to fill out the paper work, two weeks of waiting and not only was my college paid in full for the semester, I had a credit at the book store, and a check for me! Maybe we should require higher standards on one of these aspects. My suggestion is a loan match program. One cannot get a loan for any more than you can put in. If it takes you two years to save $2500, then you would be eligible for a loan of up to $2500. The average yearly tuition for an in-state university is $4600. Once in, I would then recommend strict academic standards. As long as you meet these standards, your consecutive student loans would be for the entire amount. This simple combination would weed out those going to school for a good party. This benefit is obvious for everyone involved. This keeps the University full of students that should be there, not just those that want to be there. I understand this is still a form of government creating a false demand, but as I said, there are benefits to society that is worth this investment. However, it should not be a federal program. This program should be administered on the state level.
