Sunday, July 8, 2012

Student Loans or Tuition?

On Friday President Obama signed into law HR 4348 ( to continue federal funding of highways and subsidizing of student loans for college students. President Obama said, "For months, I've been calling on Congress to take half the money we're no longer spending on war and use it to do some nation-building here at home. There's work to be done building roads and bridges and wireless networks. And there are hundreds of thoughts of construction workers ready to do it." Yet President Obama won't allow the Keystone Pipeline but I digress. President Obama continued to say, "The same thing is true for our students. The bill I'm about to sign is vital for millions of students and their families. But it's not enough to just keep their student loan rates from doubling." (

The President is correct when stating that keeping "student loan rates from doubling" is not enough. The trouble with higher education is the cost/benefit relationship. Granted students can be their own worse enemy by going into a major that has no future or little chance of assisting in repaying loans taken out. The average cost for a 4-year public institution is $12,804 while private institution is $32,184 which have both increased by 37 percent and 25 percent respectively since 1999.(

During the debate on subsidizing student loan rates reports of students leaving school with $100,000 in debt and not being able to find jobs to help repay them. When did it become a right to be given a job after one graduates from college? Perhaps these students that come out with over $100,000 in debt should ensure the degree or career path they seek exists. Former Secretary of Education William Bennett views the student loan subsidy as the next bubble the United States will face. While Mr. Bennett does believe that rates should remain low for part of society that doesn't include the middle or upper class. Mr. Bennett poses this question, "If we keep interest rates low, will colleges reciprocate and by keeping tuition low?" (

I don't think so Mr Bennett. Unfortunately, the higher education system offers classes and degrees that are obsolete or little demand for them. Then again, as I stated above, students going to school need to use their brains when choosing their degree or career path. If one is going to spend $60-$100K on a higher education then one best learn a skill set that will garner a job that makes $60-$100K a year. Trouble is that entry level positions don't pay that. Right now we have $1T in student loan debt outstanding. The dirty little secret is that if one hangs onto their subsidized student loan it will be forgiven after 20 years. Then who is left on the hook?