For several years now, I have been warning about the cost to tax payers for student loans that are never going to be paid back. We are talking about Trillions of dollars or at least a 10% addition to the national debit. It is so bad that it is almost impossible to comprehend. As I see it, it is even worse than most think and I don't just mean the amount of money. Here is what it will really cost us.
The government student loan program is costing us a lot more and in ways that most never even thought about. Here is my list.
(1) Loan Defaults
This is the first thing that most people think about and it is big. Most loans are early in their life and thus "no" payments are due. When we look at those that have payments due, almost 50% are in default and the percentage is rising. In black colleges, the default rate is almost 75%. For these "new age" private colleges, the default ration is also almost 75% and getting worse. Obama wants to double down on student loans or forgive many of those already made.
(2) Inflation of Tuition
Another thing that the student loan program has done is to cause inflation in tuition for most colleges. It is simple economics. When you pump money into colleges, it causes all the costs to go up. The colleges do not have to exercise cost control because the government is forking out the money. The salaries of professors has gone up faster than the general rate of inflation and can teach fewer classes because there is enough money to hire more professors.
(3) Class Taught
Because so many of our kids who can qualify for student loans are unqualified, the college classes have been dumbed down. These unqualified students take majors that are "easy" and for which there are no jobs or the jobs pay so little that they can never pay back their student loans. Even technically qualified students get caught up in this process that they do not take the more difficult classes either. There is space in most colleges for science and math majors, but students opt for "fluff" majors and leave the technical majors to foreign born students.
(4) Lost Opportunity
It is not for free to send our kids to college to take majors that are worthless. We waste the limited "time" of our kids. While in college, they do not produce any thing, yet they eat up public resources and their own time. Any society only has so much resources and the people only so much time and if we waste those we lose. You can never get back the time that you have wasted. That is a fact for individuals as it is for any society.
(5) Bitter Young People
People who spend so much of their lives and money going to college only to find that they have made a serious career error become "bitter". They do not take responsibility for their actions. They blame others and try to get even. This is one of the worst things that can happen to a society. It fictionalizes communities and creates a situation where many do not feel they have anything to lose by antisocial actions. It is happening and it is and will get more ugly.
It is bad and you will see as time goes on that I am right on this point. It is up to you to keep you eyes open and do what ever you can to prevent us digging an even deeper hole. This hole that we have dug will take years and years to get out of. So far, we have not stopped digging and we have to do that before we can start getting out. I am just a small voice, but I am sure about this one.
PS----------
Obama is now hot to excuse student loans. What do you think? I know for a fact that many of the kids who took out student loans did not use the money for education. I predict that Obama's program will "not" require the students to show where they used the money. Further, Obama's program will not require that the student actually earned a degree. It will not even require that the degrees earned be in something that the country needs. We don't need more Political Science degrees or Law Degrees.
Our education system is sick at all levels and government insured student loans are just one part of the problem. Our kids can not cut it compared to most of the rest of the world and that is a fact. Get used to it unless you want to work to change it.
