Wednesday, September 02, 2009

1001 Ways To Tune Up TheWorld, Number Twenty-Seven

I missed yesterday, so the whole list will take 1,002 days. I hope the world can wait an extra day for that last one.

27. Stop federal support of student loans.

Every time I mention this to someone, they scream bloody murder about how will people pay for college and blah blah blah.

Federal support of student loans is a terrible idea and it's helping wreck college educations.

The federal government supports student loans in a couple of ways. First, it guarantees them. Second, it pays interest on the loans while students are in school. Third, it makes collecting the loans easy by making them virtually nondischargeable in bankruptcy and easing collection efforts.

All of that means that student loans are about the best possible loan you can make, because there's virtually no chance you won't get it paid back. If I had any money, I'd get into the student loan business as quick as possible.

But student loans are killing students. They're making it possible for colleges to amp up prices and set ridiculous payment plans and they're making college cost more than ever, reducing choices in what to major in for students and making it harder for students to take jobs after college because of phenomenal debt. Middle had to borrow over $15,000 this year, to go to a small state school. Why? Because the school requires her to live in the dorms and won't set up a payment plan.

Middle has to live in the dorms, first of all. They require it. The cost of the dorms is roughly the cost of an apartment with groceries for nine months. But if she rented an apartment, she'd pay her rent monthly and buy her groceries weekly. She'd have to come up with, say $700 per month one month at a time.

Living in the dorms, though, Middle has to come up with the same $700 per month (0r more) all at once, right now. That's because the school's "payment plan" is this: Pay 1/2 now and 1/2 in a month. Imagine a landlord telling you that: Yeah, I'll rent you the apartment. Pay me $4500 right now and $4500 in a month. You'd keep shopping.

But schools can charge it because there are guaranteed student loans and private student loans and those loans are nondischargeable and will be paid back, one way or another. So schools can keep hiking tuition and imposing ridiculous payment plans and making it harder and harder for people to pay for school without graduating under a massive amount of debt.

That massive debt then limits their occupations, both up front (because they have to choose an occupation that will let them pay for learning it) and at graduation, when they can't go into public service or lower-paying jobs because of the debt.

The government recognized this and made some changes, allowing income based repayment plans and some credits for public service, but I say go further. I say stop guaranteeing student loans already. Period. We don't guarantee housing loans or car loans (except in rare circumstances) and those lenders are doing fine.

Instead, have need-based grants that don't need to be paid back, and allow private lenders to fill the gap. But then change the law to treat student loans like any other loan -- dischargeable in bankruptcy and no easier to collect. That'll reduce the availability of loans.

At the same time, change the rules to say that payment plans set up by colleges, if reasonable, are nondischargeable. So Middle could attend UW-Oshkosh without a loan, but paying on a month-to-month basis; give that payment plan the protected treatment that student loans get now, which would encourage colleges to set up reasonable payment plans without hiking fees and paying administrators whopping salaries, salaries that are balanced on the backs of students.

13. Ban driving any kind of automobile, motorcycle or other personal vehicle within 1-2 miles of downtown in any city with a population of more than 100,000.

12. Abolish gym class; instead, teach kids to play musical instruments.

11. Change copyright laws to allow anyone to use anyone else's creative work provided that the copier pay 60% of the profit to the originator and that the copier not cast the original work in a negative light.

10. Have more sidewalk cafes and outdoor seating.

9. When you have to give someone a gift, ask them what they want, and then get that thing for them.

8. Never interrupt or finish someone's jokes.

7. Periodically, give up something you like for at least a month.

6. Switch to "E-money."

5. Have each person assigned one phone number, and then add an extension for the various phones and faxes that person might be reached at.

4. Abolish Mondays and Tuesdays.

3. Don't listen to interviews with athletes or comedians.

2. Have "personal cashiers" at the grocery store.

1. Don't earn more than $200,000 per year.

1 comment:

Rusty Webb said...

Honestly, I don't know enough about the topic to really warrant my input. But I've seen it enough in other areas where the government gets involved and seen similar results. What I'm sure started out as a good idea has a few loopholes, then, as soon as those loopholes start getting exploited and folks start getting very rich, lobbyists get involved and no real changes will ever get made.

So, I'm sure your right. Good luck getting it implemented.