The Impending Student Loan Crisis

Every year college tuition increases at a rate much greater than that of inflation or wages. Graduates every year are facing insurmountable debt and can’t find jobs. If they are able find jobs they usually still do not make enough to both pay off their loan and try and start a life with a house, spouse, and kids. The left’s solution to this madness is free education for everyone! As if that works anywhere. The countries that have free colleges are countries were only an elite few get to attend a University. This is because the colleges charge astronomically high prices and only have to accept a few people, because the government is guaranteeing whatever they ask for.

I propose that we take a look at why the college prices rose so high, in comparison to inflation and wages, in the first place. When my parents graduated college, they were debt free. They were able to pay off their debts by working part time minimum wage jobs time during the school year and full time during the summer. This would be impossible today. If you worked at a minimum wage job for 40 hours a week and took no vacations for a year, you would make $15,080 and that’s with no taxes taken out. The average cost for a college is over $21,000, not including living or food. All that aside, this means that they’ll be approximately $6,000 short and $24,000 for a four-year degree.

So, what’s changed? Why have college prices skyrocketed since my parent’s time? The truth is that big daddy government gave a lot more federal aid and forced banks to give student loans to any person who applied for one. Most people applauded this because it sounded wonderful, but the truth is that it hurt students in the long run.

Colleges across the country are now able to charge whatever they want and the students will be able to come up with the money. Before the government intervened, if you were accepted to University of Illinois, for example, a bank would analyze your college and see what their graduation rates were and the jobs that came out of it. Then they would look to see your specific major and decide if it would be worth it. If you majored in accounting, you would be very likely to pay off the loan at a reasonable price and if you were a feminist dance theory major you most likely wouldn’t be able to repay the debt.

The banks deciding for students if it would be worth it to take a student loan out was wonderful. It was great because an 18-year old kid, who just 3 months prior was asking to use the washroom, didn’t have the task of evaluating the ever-changing market place. The banks were able to would tell this young individual whether or not that woman’s studies degree was going to get them that six figure salary they always dreamed of.

If we stopped forcing banks to always give loans, colleges that were charging too high of prices would be forced to lower them so their future alumni would be able to afford it. The universities would also be forced to innovate to find more majors that will provide people the skills required compete in today’s work force. Kids would be more competitive in academics than sports. Universities would want the smartest instead of the fastest because the smarter person would boost their percentages in job and salary rates, allowing them to charge a higher price. Education and price would be the competition among colleges again.

The real estate crash that occurred in 2008 happened the same way. The real estate bubble was caused by the federal government telling banks to give loans to people who did not meet the standard criteria. This artificially jacked up the housing market, until the bubble burst, because people couldn’t pay back these giant loans that they shouldn’t have been granted.

The reason that this hasn’t already happened, in the student loan world, is because you can’t default on student loans. However, it will come crashing down and the left’s lord and savior, the government, will try and swoop in heroically to clean up the very messed that they caused. Thomas Sowell once said, “The welfare state is the oldest con game in the world. First you take people’s money away quietly and then you give some of it back to them flamboyantly.” When the government bailed out some of the corporations, with taxpayer money, from the very mess that they themselves caused, they felt like heroes and they will again when the students can’t pay back their loans.

The argument in 2014, by the left, was that interest rates on loans were too high. When they realized that was stupid because it was the giant principal that was killing these students, they decided to say that college should be free. The thing is it’s not ever free and much less students will be able to attend college if it’s all paid by the government.

The point of this piece was to point out that there is an impending student debt crash whether we like it or not. Also, for people to see that whenever government tries to stick their hand in the market it always affects the market in an unnatural and negative way.

Author: AntiMSM