At least, that appears to be the opinion of the editorial writers at Reason. Like most Libertarians, they're of the opinion that if kids are poor, it's because they chose the wrong parents. The poor kids should have just been smart enough to choose comfortably off parents like their own. Duh.
That said, the problem involved here is real: by basically handing out government-subsidized student loans to everybody, not just to poor kids, the Feds basically caused massive tuition inflation as colleges competed to buy the most gilded equipment for their labs and the biggest research names for their faculty. The colleges could not have done these massive tuition hikes if not for the fact that students could now not only be allowed to take out student loans to pay for them, but basically could be *forced* to take out student loans to pay for them, since a year of college is now beyond the financial means of any family that is not independently wealthy.
Furthermore, by shifting aid for poor kids from grants and scholarships to non-dischargable student loans, poor kids are being punished disproportionately when they default on the loans. Poor kids will have a harder time finding a job out of college for reasons out of their control -- poor kids' parents don't have the connections that rich kids' parents have (e.g., my parents were on a first name basis with the owner of a local gas station, not with the CEO of a major computer company like Bill Gates's parents), and because they grew up poor, they don't "dress right" or "talk right"(i.e., like a rich preppie) because that's not how people dress and talk in the 'hood so they have no experience doing it and when they try, they suck at it. The end result is that a poor kid has to be twice as smart as a rich kid to get a job out of college. For the rest, they're condemned to a life on the edges, because with that non-dischargable and too-big-to-ever-pay loan on their record, they can't get a real job (because their wages would get garnished), they can't get a credit card (thus meaning they can't ever use the Internet to purchase things, and given the shift from brick-and-mortar to Internet sales, that basically means they're cut off from a huge swathe of the consumer culture), they can't ever retire and get Social Security (because of a. no work record due to having to take off-the-books jobs, and b. even if they did put in enough on-the-books time, so much of their pitiable $14K/year Social Security allowance would get garnished as to make it impossible to live on).
And finally, the rise of virtually-unregulated private schools funded by all this student loan money and targeting poor kids has had a devastating effect upon poor kids. Poor kids don't have the ability by and large to get into elite colleges, due to lack of decent schools in their neighborhood and lack of exposure to the middle class culture needed to score well on standardized tests (which are basically tests of, well, how middle class you are, there is no -- ZERO -- evidence that standardized tests have any correlation to any fundamental intelligence, just that they accurately predict how middle-class you are and thus how well you will perform at a college that expects a middle-class background). State colleges are overcrowded and often require you to show up year after year to stand in line in hopes of getting one of the few precious slots allocated to in-state students (because they can charge middle-class out-of-state students full price, thus state governments have been cutting in-state slots at state colleges all over the nation to plug their higher education budget holes). What's a somewhat bright but naive poor kid supposed to do?
Well, we know what they do -- they get scammed. In other words, Reason is right that the current system sucks donkey dicks. But you know what Reason's solution the problem is going to be. They're going to say that the Free Market Fairy waving her magic wand all over the higher education field will fix everything -- even though that never happened before the GI Bill educated a generation of Americans who otherwise would have never had access to higher education. In short, Reason's lack of, well, simple acquaintance with actual objective reality makes the Free Market Fairy smile:
Yes, that's one smiling fairy all right...
Oh yeah, solutions?
- If student loans default because the graduating students can't find jobs within the unemployment deferral period, require the private colleges to pay the loans back, rather than the students. We've told our kids that college is how you get a good job. If we are lying, why should the kids pay the price? (Oh, why do public colleges get a pass here? Because a. they're cheaper than private colleges, and b. it'd just be moving taxpayer money from point a to point b anyhow, so what's the point?)
- Eliminate federally guaranteed student loans for middle class students. I'm not joking. They're poison. They're financial crack. Middle class parents can do without a new BMW and delay buying that McMansion for a few years to pay their kids' tuition, which, BTW, would be far less because otherwise colleges would have to shutter their doors because nobody could afford to pay out-of-pocket at current tuition rates.
- BRING BACK FULL TUITION / BOOK GRANTS FOR POOR KIDS. When I was a poor kid going to college, 100% of my tuition and textbook costs were covered by federal grants, and 100% of my room and board for the first year was covered by a state scholarship for gifted and talented students. After that the only thing that I took out loans for was incidental expenses, working multiple part-time jobs was sufficient to handle room and board. The end result was that my final student loan tally was quite modest -- I think I ended up owing something like $5,000 at the end of my college career, not peanuts by the standard of a poor community but hardly something that was going to hang over me for my entire life. But now we're expecting poor kids to take out tens of thousands of dollars in student loans JUST FOR TUITION AND BOOKS! Which is utterly nuts, given the extremely high chance that they'll never be able to pay it back.
-
Make student loans dischargable via bankruptcy court(and non-reportable for credit purposes) after five years of non-payment. This imposes much the same penalty as bankruptcy for non-payment of student loans -- you won't be able to get a credit card, you won't be able to buy a new car, and so on and so forth -- but there is at least the knowledge that at the end of the period, you can get out from under a debt that's unpayable because Weerip Youoff College didn't provide the education and training that you paid them for. Otherwise we're condemning a huge number of kids to life on the margins, with dire consequences for the future of this nation. And by having that delay, we get rid of the problem of the freshly-minted lawyer or doctor immediately declaring bankruptcy to have his debt discharged, when it's clear that within a few years his income is likely to be sufficient to pay the debt...
So anyhow, that's
my solution, as vs. the magic fairy dust wishful thinking of the loonie Libertarian right, whose ideas have never worked in the
real world but, like the ardent Marxists, they claim that this is because their ideas have never been properly implemented. Marxists, Libertarians... both loons whose ideas have never worked in the real world, but they
still insist, "but they will work this time, for real! We promise!". Uhm, yeah. Forgive me if I roll my eyes and chuckle...
-- Badtux the Snarky Penguin
