Student Loan Defaults – Here Is The Reality

Surging Student Loan Defaults Spark New Fear Of Potential Taxpayer-Funded Bailout – Cavuto


In 2015 Obama pushed hard for tuition free community colleges and set up an advisory board to  push the efforts of America’s College Promise plan that would make two years of community college free nationally.

He even doubled down in his version of the 2017 federal budget.  In his budget, the federal government was to have would covered 75% of the cost of tuition for two years, approximately $3,800 per student on average. The remaining 25% was to have been covered by states that chose to participate. Books and outside support such as tutoring and living expenses were to have fallen on the colleges to supply. The plan was projected to cost $61 billion or higher over a decade.

Bernie Sanders put it in his New Hampshire victory speech: “When we need the best-educated workforce in the world, yes, we are going to make public colleges and universities tuition-free.” However, critics of Sanders’ free-college proposal charged that his assertion was unrealistic and that he didn’t explain how to pay for it.

Hillary Clinton announced a plan to make public colleges free for the children of any family earning less than $125,000 a year.  The more she tried to make good on her free college promises, the more problematic the policies needed to get there became.

California has already attempted to have free tuition for colleges. Even now at least one in San Francisco is considering continuing the effort. However, California got into deep financial trouble a few years back, students who lived in the state learned that the ability to get into a college under free status was not so easy. The state had to trim more than $2 billion from its higher education budget between 2007 and 2012. Even those students looking for colleges now that attempt to honor this have found the possibility of free tuition to be few and far between as the number of free course studies available shrinks and the number of students seeking them increases.

States with tuition requirements are finding they are having difficulty funding their higher education. Many advisors are suggesting using two-year colleges then moving on to the more expensive universities for completing a degree. Some students are using online programs with lower fees and adjustable times to meet their needs.

The problem is the more politicians try to make good on free college promises, the more problematic the policies needed to get there become. It’s easy to devise a straightforward way to meet the goal: Students at public colleges and universities simply forward their tuition bills to the federal Department of Education, which pays them.

That policy would also be a financial disaster. Any public university president with an ounce of sense would simply raise annual tuition by $5,000 or $10,000 or more, secure in the knowledge that Uncle Sam would foot the bill. It would be an unlimited bonanza for colleges and a huge drain on the Treasury, for a program already estimated to cost tens of billions of dollars per year.

According to Labor Statistics in August 2016, From January 2006 to July 2016, the Consumer Price Index for college tuition and fees increased 63 percent, compared with an increase of 21 percent for all items. Over that period, consumer prices for college textbooks increased 88 percent and housing at school (excluding board) increased 51 percent.

Rubio in his bid for president suggested online courses or linking repayment of university funding to income by using equity financing.  Like Shark Tank, Rubio put forth the idea that private investors would pay for a student’s education in return for a claim on a chunk of his future earnings.

In some ways this is already in play but using corporations not private investors. Many big companies who hope to attract the brightest and most promising already knock on high school and college doors to find the best. They use them as “student labor” or “apprenticeship” if they are good enough with promises of financial assistance as they go through college and continue working at the company. Others who hire employees and see their interest and value then help pay for courses in fields of company interest.

No matter what solution is considered, the real issue here is that colleges and universities need to weed out courses which are not essential to a field of study, par down their courses to lower financial burdens on students, reduce their faculty and staff, and drop all of the liberal garbage as they prepare students not in “liberal arts” but for reality after they graduate.

Technical schools are another method that should be brought back especially when all levels of interest are not met through a college but are increasingly needed in the job market like mechanics, carpentry, and other fields.  Not every business nor every student is suited to a college degree.  Skills needed for many fields can no longer be found because society and colleges have done a snow job and convinced the world that a diploma from college is a necessity.

That trillion-dollar price tag is far too steep and much of it is overwhelmingly the “cost” of prestige not the reality of the field wages. At the very least federal auditors, banks, and colleges need to hammer out a more realistic cost for education then reduce current loans and force students to pay an amount predicated on their salaries. Even bankruptcy realizes that paying back student loans are a necessity and have passed laws to force their payments despite being an unsecured loan.

No matter what NO new “bailout” should be allowed at least not without students being forced to pay something on their own. The colleges and liberals have sold students a “bill of goods” based on dreams and lies.

Reality is that to achieve one’s dream job, one has to work and pay for it in order for it to mean anything of value to the person. “Life, Liberty and the pursuit of Happiness” is all that our Declaration of Independence guarantees, the rest is up to the individual.

PBS source
EAB source
Inside Higher Ed source


About Uriel

Retired educator and constitutionalist
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6 Responses to Student Loan Defaults – Here Is The Reality

  1. Elaine Morris says:

    This is a VERY sore subject to me. There were no outstanding loans…UNTIL Obama got into office. I was getting collection calls and kept explaining over and over again, “I don’t have any outstanding student loans. Finally, I received a call and I remember what he said, and it was years ago: “You don’t have any oustanding loans to pay off. You weren’t on the list; however YOU ARE NOW. For $4,000, I will take you off the list.

    • Uriel says:

      Wow. So why DID ther call? I worked through college in the food court to pay for mine along with a small grant so when I left I owed nothing. When I went to a business school much later I paid that back for a few years. In between I relied on business I worked at to give me a few more courses. What REALLY burns me up is these idiots are using their money for pleasure not learning. So no those who misuse are not deserving of write-off. Thanks for commenting Elaine. Welcome to Hardnox.

  2. skip says:

    My DW paid hers off at $126.00 a month for for 12 years. We were pretty poor at that time,But we paid every penny of the twenty grand back.. When she made overtime we doubled or even tripled the payment. When I saw than the Crooks[senators&congressmen] and there children did not have to pay back there loans was we ever pissed. Like always the little man will pay.

    • Uriel says:

      Agreed Skip. Most of them get help and abuse it instead of attempting to pay back. At one time remember how there was a racket going in the medical courses? Young doctors came out with huge loans then bought big ticket items. They then defaulted in bankruptcy and had the loans scrubbed. That is why bankruptcy court around 2000 changed the law so it continued to be repaid.

  3. Hardnox says:

    This is a multipart scheme.

    1) not every kid should go to college.
    2) kids took bullshit courses with no prospect to get a job in these fields.
    3) much of it was a scam to monetize universities.
    4) democrats are great because $ are available hence votes for D’s.
    5) republicans suck because they will attempt to fix it hence no votes.