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Education The Almighty Buck Politics

Ron Paul Wants To End the Federal Student Loan Program 1797

Posted by Unknown Lamer
from the seems-about-right dept.
On the heels of declaring his intent to axe a few departments from the federal government, Ron Paul has revealed more plans should he become President. The_THOMAS writes "Ron Paul wants to end Federal student loans stating that the Government involvement artificially inflates the cost of a college education and that once the government is out of the situation, students will be able to work their way to a college degree. What do you think?"
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Ron Paul Wants To End the Federal Student Loan Program

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  • by ZHaDoom (65485) on Monday October 24, 2011 @09:33AM (#37816170) Homepage

    Subsidies inflate pricing. I agree.

    • The education bubble [nwsource.com]

      "students are borrowing twice what they did a decade ago after adjusting for inflation" and in the past five years total outstanding debt has doubled. That compares with falling debt on loans for houses and credit cards.

      Remember, that's a trillion dollars of debt that can't even be wiped out by bankruptcy, unlike the previous bubbles of the dot-bombs and real estate.

      • by JoeMerchant (803320) on Monday October 24, 2011 @10:37AM (#37817530) Homepage

        I got one of the earlier student loans in 1984-88. During those four years, tuition at my U cost $60K, $10K in 1984-5, then 13K, 17K, and finally 20K in 1987-8. We didn't have anything else to protest, so some (not me) marched on the president's office to protest tuition hikes. Me, personally, the U and the state were giving me scholarships that meant my out of pocket tuition costs dropped from $3K in 1984-5 down to 0 by 1988.

        College costs will drop when employers start hiring people who didn't go to expensive colleges and giving them the same compensation as those who did. It doesn't matter if the Feds, or your church, or your great aunt Tillie is financing it, if there is a cost-benefit advantage, the cost will rise until there isn't.

        The opposite side of Ron Paul's thinking would be to inject government cost controls on a select number of highly regarded universities (State schools?) and make a respectable, employable college education affordable as competition for the endowment based institutions that are fattening up their war chests with inflated tuition.

    • by mcgrew (92797) * on Monday October 24, 2011 @10:12AM (#37816970) Homepage Journal

      A loan isn't a subsidy. But if student loans were indeed the cause of the high price of college, what makes you think stopping them would make the price go down?

      I went to school on the GI bill, and the state of Illinois paid my tuition. That's s subsidy. But I still had to work and was still dirt poor. That was in 1975; when did the school cost inflation begin?

      Without student loans, only children of the wealthy will be able to go to college. The price keeps it out of reach of the working class, and always has. Education never was inexpensive.

      • by bhcompy (1877290) on Monday October 24, 2011 @10:25AM (#37817260)
        California had free higher education for residents paid by taxpayers(and it is set in the charter for higher education in the state, which all of the school systems now openly violate). From UCLA and UC Berkeley to Bakersfield Community College. Free. Over time this has changed while at the same time loans have been backed by the government and student debt has been increasing. Correlation doesn't equal causation, but it's there, it happened
        • by bennomatic (691188) on Monday October 24, 2011 @12:13PM (#37819280) Homepage
          My first semester's registration fee at UC Berkeley: $600.00

          My final semester's registration fee, also at UCB: $2400

          Granted, I took five years, but still, 400% change in four years is really something. The state pulled back funding, the universities increased their costs to make up for it (and more?), and yes, private U's probably do take advantage of the situation by raising their own bars.
      • by Attila Dimedici (1036002) on Monday October 24, 2011 @11:58AM (#37819048)
        However, since the advent of student loans, the cost of a college education has risen at an astronomically higher rate than inflation. If one looks at products which have a price increase significantly greater than the rate of inflation for an extended period of time (more than a decade), most, if not all, are products that are to one degree or another paid for with government subsidies of some kind.
      • by roman_mir (125474) on Monday October 24, 2011 @12:04PM (#37819158) Homepage Journal

        A gov't GUARANTEED loan IS a subsidy.

        It's a worst kind of subsidy, every gov't program that guarantees something only does so at the expense of everyone's savings - the Fed will print (inflate) and steal your purchasing power to pay the bad debt off (bail outs to banks, companies, home owners, eventually to students, etc.)

        The prices will come down if gov't money is removed from making these guarantees and quality will go up. Right now quality is shit, because nobody competes on quality. It's not like fewer people will want to enter your facilities if your quality is not that great, because space is limited, but gov't guarantees are not.

        Yes, if the gov't guarantees are cut the tuition prices will fall (as it should) and based on qualities a number colleges will fail and NOT as many people will go if they have to take a private loan and prove it's not a waste of time and money (and that's what you have to do, you have to prove that there is some value there, some asset, or that your degree will allow you to pay the interest and loan back).

        But this is a GOOD thing. Not everybody should go to college, not by a long shot. Right now the number of sociology majors is ridiculous, who needs any of them? Nobody does, they are worthless degrees and they are given out like candy. It happens because of the money transfer from gov't to educational facilities and students are the collateral.

        Students are collateral, money is given to universities, universities in their turn support the political system that gives them this money, and the vicious cycle continues and economy worsens and those degrees are not worth anything and the lie of Keynesian solutions grows as the Fed counterfeits further.

    • by bluefoxlucid (723572) on Monday October 24, 2011 @10:20AM (#37817140) Journal

      I actually advocated this to a coworker friday. Do we have a half-intelligent politician or a lucky retard? Even a broken clock is right once in a while, whether it's stopped or spinning backwards...

      Student debt spins out of control because there's no accountability. The Federal Loan Program is an automatic bank bail-out, but for the universities. Without a student loan program, the universities have three choices:

      • Find a bank to supply loans
      • Operate as a bank themselves
      • Demand students find their own financing

      In the second case, the university must take on risk itself; in the first and last, they offload the risk to the student or a bank (the student can pay out of pocket or find a bank and get their own loan in the third case). In any case involving a loan, someone takes a risk of a default and a bankruptcy declaration, meaning student loan offerings will become more stringent. Tuition may decrease due to lack of liquidity--no access to free money means you can't sell as much crap.

      The current situation leaves a case where universities have their greatest interest in getting students spending money freely. If those students default, who cares? There's no bank that cares, and the university doesn't care. This means they're best off encouraging students to get into debt they can't handle, and that they can charge ungodly high tuition levels and people will just pay it because the money is there.

      Shove all that shit on the bankers and suddenly there will be some explaining to do if you want money handed to you. Another recession caused by excess borrowing WILL put a stop to this shit, and when the banks cry and the students complain they just can't afford college because bank loans aren't easy to get for $250,000 when you're a jobless starving artist, tuition will come down.

  • by loftwyr (36717) on Monday October 24, 2011 @09:34AM (#37816174)

    Maybe if he had to actually work for a living at a minimum wage job, he'd stop asking those with little to no money to give up their chance to be raised up.

    • by tmosley (996283) on Monday October 24, 2011 @09:38AM (#37816246)
      He gives back his salary every year. He makes NO money off of being a Congressman.
      • by hedwards (940851) on Monday October 24, 2011 @10:00AM (#37816690)

        Which is a really good justification for him shutting the hell up when it comes to issues of welfare. I can't personally afford to work for free, in fact most Americans can't afford to do so either. We just don't have the money in the bank to allow for that. Perhaps if the GOP kleptocracy would stop looking for new and innovative ways of stealing from the poor to give to the rich, we might be able to afford to give back more.

        At the end of the day, any politician that can afford to do that, whether or not they do, has no right to suggest that we cut back on our minimalist safety net.

        • by fuzzyfuzzyfungus (1223518) on Monday October 24, 2011 @10:16AM (#37817074) Journal
          I have relatively little interest in the question of what Dr. Paul may or may not be doing personally; but that is sort of the whole point of paying politicians a salary.

          On the minus side, you do run into situations where City Counselor McSleazy passes an obscure bill such that the clock for his retirement started when he worked as a volunteer at the library one summer back in high school, leaving him to retire at 40.

          On the plus side, if being a politician actually pays in vagely the same bracket as other jobs requiring similar qualfiications, you don't have a class of "representatives" that is 100% either bought-and-paid for because they couldn't afford it otherwise, or economic gentry who can afford to retire from day to day work in order to focus legislating in the favor of the local gentry.

          That's why, historically speaking, legislative salaries have been something of a contested issue between the proponents of approximately egalitarian democracy, and the proponents of limited-sufferage democratic aristocracy. Career politicians generally leave a slime trail, and it is hard to like them as a class; but if you can't can't earn wages as a legislator, you can be pretty much assured that legislating will be done entirely by people who have other ways of obtaining support...
      • by jareth-0205 (525594) on Monday October 24, 2011 @10:03AM (#37816764) Homepage

        He gives back his salary every year. He makes NO money off of being a Congressman.

        You idiot. He has enough money so that he *can* give back his salary. He's not and never has been living hand-to-mouth. That's the entire point the original post was making!

        • by tnk1 (899206) on Monday October 24, 2011 @11:11AM (#37818240)

          You're right. He does have money and he doesn't need his government salary.

          However, the problem isn't with what he does with his salary, the problem is with the situation where people are attacking Ron Paul instead of attacking his position. He is entitled to both his salary and whatever he has made in private life. And that doesn't make him any less qualified to make a point about what is needed to improve the country.

          I don't live in Africa, but I doubt anyone would call me out about condemning abuses and corruption that happens there. The fact that I am not needy does not make me unqualified to make decisions to help alleviate the problem. Indeed, being somewhat successful might well make me more qualified to help other people be more successful. Of course, that doesn't mean I am the only voice that should be listened to, we do need the viewpoints of the unemployed, the students and the otherwise disadvantaged to make a good policy, but we seem to be arguing that only a needy person has any right to talk about the safety net, and that is just plain wrong. After all, it's the well-off people in previous Congresses who set it up to begin with, was it not?

          Mind you, I don't like his idea of pulling the rug out from under the student loan system, but I don't like hearing talk about him being rich and therefore unable to empathize with anyone else. It makes me think that his opponents in this case have no better points to make than an appeal to emotion and the language of class division.

    • by tibit (1762298) on Monday October 24, 2011 @10:04AM (#37816778)

      The problem is that the federal student loans, while genuinely useful to some, have been exploited pretty much to death by the for-profit colleges. Those do powerful marketing and have pretty much established the idea that everyone should go to college, no matter what. It's the same with diamond jewelry: somehow a semi-rare rock is elevated to cult status, and every woman in the U.S. feels that getting a big one on a golden ring is cool and shit. The colleges merely took a good marketing lesson from DeBeers and applied it to a different market. The outcome is pretty much the same. Couples get into debt for shiny rocks. Students get into debt for college education that can be very well useless to them. Nothing new here, move along.

      As much as I think some of RPs ideas are overreaching, I do believe that axing or at least reforming the federal loan program is a must. As an alternative to axing, I'd limit its availability to people who to non-profit schools. I'm sure a more extreme option exists, say limiting it to people who go to non-profit public schools.

  • "Free" money (Score:5, Insightful)

    by tmosley (996283) on Monday October 24, 2011 @09:36AM (#37816194)
    Subsidized student loans are "free" money that enslaves most for a lifetime, moreso today than at any time in living memory. There was a time when working part time over the summer would be enough to pay ALL college expenses, now you have to work some 35 hours a week during the semester plus full time in the summer and over breaks. This is outrageous.
    • Re: (Score:3, Insightful)

      by CRCulver (715279)

      Subsidized student loans are "free" money that enslaves most for a lifetime.

      I must agree. Look at young people in other Western countries: when they finish their education, they have the option of travelling for a while, or they can start to do seasonal work, save up their money and spend the rest of the year at leisure. Meanwhile, American students are frantic to find a job as soon as they graduate, because the demands for repayment come 6 months after their graduation date and there's no letup. By the ti

    • Re:"Free" money (Score:5, Informative)

      by garcia (6573) on Monday October 24, 2011 @09:54AM (#37816566) Homepage

      Ahhh, yes. The old misconceptions about college!

      College is not necessarily a free-for-all experience where you spend the weekends drunk/recovering and Thursday nights doing the pre-party for those who are suitcasing it that weekend.

      No, college is about being an adult and making adult decisions. I've worked for colleges in a variety of roles over the last 10 years and two of those years were in admissions for a community/tech college.

      Here in Minnesota you can go to college and complete your undergrad for very little money. You start as a PSEO student in HS and the state pays your way through many of your first two years of college undergraduate credit without your taking out any loans. They count towards your HS diploma AND your college degree.

      If you don't choose to go that way (or even if you do) you can enter the state's community college system and live at home (working part time hopefully) while taking college courses at costs far lower than you'd spend elsewhere--especially out of state.

      Then you move on to an in-state four year institution, preferably close to home so you don't have to pay many boarding expenses and ride mass transit or carpool to save on driving costs. Then you complete your degree with very few student loans and nothing hanging over your head.

      ---

      However, most people instead have dreams of grandeur and take out ridiculous student loans to attend some out-of-state school or in-state private institution which sets them back far more than they could ever afford. Instead of checking the lists for the mid-life salary range for a graduate of one of these schools they instead check the Best Party Lists instead.

      No, this doesn't apply to everyone--like those of us who had a scholarship or some other way of affording school without loans lasting forever--but it seems to be a growing trend of those complaining now.

      You are a legal adult at 18 years of age and regardless of your (and your parents') poor choices for your future does not mean that you could not have chosen another path.

      • Re:"Free" money (Score:5, Insightful)

        by RazorSharp (1418697) on Monday October 24, 2011 @11:02AM (#37818038)

        You can preach personality responsibility all day long, but that doesn't change the fact that it's bad for society when we just let the vast majority fail. That's why prison populations are growing at outrageous rates. Why unemployment is skyrocketing. Why the United States is in decline.

        What you consider 'very little money' is a whole lot to some people. And mentioning post-secondary options for high schoolers is just insulting. I wasn't able to attend post-secondary because I didn't have a car. All the kids who were in post-secondary classes when I was in high school were the ones with parents who could buy their education anyway. Also, a student has to be an above-average performer for post-secondary. How do you expect someone with uneducated parents to perform at that level in high school?

        This attitude of, "it's your fault if you don't succeed, society has no business ensuring that you do" is the same attitude that has led to all the problems this country is facing. The college students who spend their time getting drunk and partying aren't the ones who cut their teeth just so they can attend. They're the rich fucks who have all their bills paid by mommy and daddy.

      • Re:"Free" money (Score:4, Insightful)

        by ohnocitizen (1951674) on Monday October 24, 2011 @11:11AM (#37818222)
        Mod parent down. I went to a state school which saw budget cuts and associated tuition and fee raises. Even with loans and scholarships, my undergrad cost a lot. Why did I go to a state university and not the local state college? Because like it or not where you get your degree does matter - a lot. People look at the reputation of your school when it comes to jobs or graduate school. Different schools offer different majors, different classes, internship opportunities, and other "perks" that can change the course of your career. Higher quality professors tend to get recruited by the more expensive schools, even the public ones. If you want to get involved in research your best bet is at a University with a graduate school, not a community college. Those "dreams of grandeur" you speak of are simply the dreams of students looking to have a career - which in other countries they manage to do without crippling loans because higher education is subsidized more heavily than here. Those "ridiculous" student loans can take forever to pay back. Look at median income and average income, and then figure in a $40k loan. That's $10k a year. How long would it take someone at the median income to pay that back? How about average income? How about your income. Now keep in mind some of the crazier loans are not for undergraduate but for graduate school - especially medical and law. Not everyone who gets a law degree graduates into a 6 figure salary at a corporation. Some work for nonprofits or in law-enforcement pulling in far less, but with loans no less high. Now get the hell off your privileged high horse and stop telling Americans that the American Dream is still alive - just not for them. Tell anyone who cannot afford a decent college degree to go be a plumber, or to go to a community college that doesn't have the courses in any of the subjects they want because they cannot afford to go to University. Myself? I'm going to advocate for making college cheaper without shattering the backbone of US financial aid like Mr Ron Paul seems set on doing.
    • Re:"Free" money (Score:5, Interesting)

      by vlm (69642) on Monday October 24, 2011 @10:25AM (#37817270)

      There was a time when working part time over the summer would be enough to pay ALL college expenses

      20 years ago I found sorta-full time (lets say, 30 hrs/wk average) minimum wage work, year around, easily paid for a nice live-by-myself apartment in a nice area, a cheap and rusty yet reliable car, and full to part time tuition while earning my associates degree. No benefits, no health insurance, no dental, nothing. That degree led to a "real job" that had benefits including full tuition reimbursement for my bachelors degree...

      Since then, minimum wage has gone from 5 something to 7 something, gas has gone from 90 cents a gallon to $4, my old bachelor apartment rent has gone from $400/month to $575/month, and tuition at the local school has quadrupled due to federal student loans...

      The other interesting issue is tuition reimbursement 20 years ago was typically unlimited, other than having to be accredited, C or better grade, and vaguely related my job and/or employer. Then it dropped to $5K/year which at that time was pretty generous, going to school part or quarter time 3 semesters per year, I was paying about $160/credit long term average including all books and fees, I usually spent less than $4K/yr, I had to be careful to submit each semester's expenses in the proper calendar year but it was no big deal.

      Since then, reimbursement remains at $5K/yr, but full time tuition at the local engineering school a couple blocks from where I work has risen to ... $540/credit (I checked online while writing this), before endless fees and parking permits and $200 each textbooks. Let's round that up to $640/credit. So I would only be able to afford about two semesters per year were I to start another degree. Has the value of the education provided increased by a factor of 4 in the last 20 years?

  • Of course it does (Score:4, Insightful)

    by Elros (735454) on Monday October 24, 2011 @09:36AM (#37816202) Homepage

    In a lot of ways, they do inflate the cost of education. However, the quality is also going down. The bigger problem is that the demand is being artificially inflated at the same time. Nearly every job requires a BS or BA...even if they don't care which subject. A University should be a place of higher learning and research, not a factory for just the next step in education.

    I agree that eliminating the student loan program will help. However, there need to be a lot more changes then that.

    • Nearly every job requires a BS or BA...even if they don't care which subject. A University should be a place of higher learning and research, not a factory for just the next step in education.

      Umm... that's exactly the idea! The subject, in some ways, shouldn't matter -- after all, it's higher education, not technical school! If you spend the time working on a degree, regardless in which department, you've ostensibly grown in knowledge, in a "Renaissance 'man'" kind of way! It's precisely in its mission as "not a technical school factory" that the university exists!

    • by antifoidulus (807088) on Monday October 24, 2011 @09:56AM (#37816614) Homepage Journal
      Yeah, it's always amazing reading biographies about people who grew up before around the 1980s, namely the huge # of opportunities they had without having to go through the whole corporate/educational grind. Look at how Hemingway lived and worked, he was far from independently wealthy, and yet he managed to maintain a pretty decent lifestyle working as a foreign correspondent, a gig he was just able to sort of pick up. Ditto for Steve Jobs, he was given opportunities in places like factories and engineering firms that would never even look twice at a kid with almost no experience and little formal education beyond high school. And it wasn't like Jobs was well connected or even incredibly good at engineering, pretty much anyone in those days could get a job like those that Jobs had just by showing up and showing that you weren't a complete dumbass.

      Nowadays I doubt you could get a job at Apple doing anything besides retail or janitorial work without a degree.....
    • Re:Of course it does (Score:4, Interesting)

      by tibit (1762298) on Monday October 24, 2011 @10:23AM (#37817216)

      As for the job requirements: this is very true even outside of the U.S. I have a first hand experience in a tax-related govt job in Poland. If you get employed, they expect you to get a master's degree ASAP. Then, they'd like to you get a Ph.D. as well. All that cost for what is essentially a bureaucracy where if you know high-school maths and pick up some law along the way, you'll do fine until retirement. There's plenty of countries in Europe where bank clerks are expected to have BS degrees. The fuck?

    • by RatPh!nk (216977) <ratpH1nk AT gMail DOT com> on Monday October 24, 2011 @10:47AM (#37817710)
      I think this hits part of the nail right on the head:

      Nearly every job requires a BS or BA...even if they don't care which subject.

      This is just wrong, IMO. IMO college is not trade school (not that there is anything wrong with trade school), but it has been turned into one by this notion that pretty much any job that is not Jiffy Lube or the Quickie Mart requires a college degree. There was some research [commondreams.org] published recently about gains in knowledge and critical thinking skills, this was the conclusion:

      Students majoring in business, education, social work and communications showed the least gains in learning. However, the authors note that their findings don't preclude the possibility that such students "are developing subject-specific or occupationally relevant skills."

      In other words, there were learning "subject specific" or occupationally relevant skills", we have a name for a program like this -- trade school.

      Students who majored in the traditional liberal arts — including the social sciences, humanities, natural sciences and mathematics — showed significantly greater gains over time than other students in critical thinking, complex reasoning and writing skills.

  • Interesting... (Score:4, Insightful)

    by bradgoodman (964302) on Monday October 24, 2011 @09:39AM (#37816262) Homepage
    Extremely interesting...

    I'm no republican, and at first I was thinking "here we go again - another GOPer trying to take money away from the little guy" - but I think he has a valid point.

    People would only be willing to spend a hundred-grand on education if there was someone standing right there willing to easily loan them a hundred-grand to do so. I've always thought there was some odd market force that was allowing the cost of education rise in such a bizarre way - this is probably it.

    If if were really up the the "free market" - i.e. there were no "special" loans, scholarships, or free-rides, people would be willing (and able) to spend a LOT less. Schools would have to come *WAY* down in price to get people in. It would be a very different landscape.

    • Re:Interesting... (Score:5, Insightful)

      by Phrogman (80473) on Monday October 24, 2011 @09:55AM (#37816592) Homepage

      A lot of those schools exist to process students and take their money. They are money making institutions that happen to award credits when you pay the exorbitant fees. A lot would shutdown if the loans system was removed.

      Another problem is that until the prices lowered, superior education would only be the purview of the rich - RPs kids would do just fine, but the average person's ability to help get their children into a higher level of living would be removed. People say there are far too many university graduates, and far too many positions for which a degree is the expected minimum, and thats definitely true. I have no degree and many many jobs are closed to me, despite the fact that I could easily do many of those jobs. However no one wants to be amongst the first people who no longer get the benefit of a good education, when the other side of the equations (business/Government) is not going to change their standards any time soon. Why should they, they can ask whatever they want, at whatever rate of pay, and someone will come along and take the job, no matter how awful it is.

      At my old Alma Mater the pressure seems to be on generating income, so the Engineering Department gets brand new buildings, while the Fine Arts department only got out of its WWII Quonset huts a few years ago - they had been there for 30 years at least. The university education system is focusing on things which can turn quick bucks (business degrees, Engineering degrees and people getting the school patents, new business development), all because the Government has stopped supporting the schools and they are expected to survive on their own. The problem is that the nature of education gets changed in the process.

    • by tbannist (230135)

      Let's put in economic terms, Ron Paul is complaining that too many people are able to go the College, thus driving the price up (Increased demand). His solution is to make sure less people are able to go to College (Decrease demand).

      Frankly, it's nearly impossible to predict accurately what would happen to tuition if no government intervention were present. It could go down because people are less willing to spend present money then future money, or it might go up because government run colleges were shut

    • by openfrog (897716) on Monday October 24, 2011 @10:09AM (#37816898)

      See what is happening in the UK. They are on the route to a 'market' experiment in higher education. This has been launched by no other than lord Browne, the CEO of BP who had to resigned in 2007, and then named at the head of a commission to review higher education finances.

      Academics are waking up to the meaning of a law that has been passed without the preliminary white paper, that is, without sufficient public discussion.
      They are going to cut 90% of public financing to the universities, and harnessing the student with the resulting debt. They call that: "putting the student at the center of the reform".

      Stefan Collini is the foremost critic of this idea and has just published a book about this. Read this article in The Guardian (free access) to get an idea of how the UK is on the path to destroying one of the finest higher education system: http://www.guardian.co.uk/commentisfree/2011/aug/19/university-market-white-paper [guardian.co.uk]

      An experiment of this sort has been carried on in New Zealand in the 90's. The result has been catastrophic. Proposals of this kind, all with a libertarian/market flavor, are being proposed in legislatures all over the world at the moment. It is as if the right had found its next target.

    • Re:Interesting... (Score:5, Insightful)

      by Inglix the Mad (576601) on Monday October 24, 2011 @10:19AM (#37817132)
      The problem isn't the loans in a practical sense. The real problem is companies driving degree inflation. Example: early Internet days, how many ISP technical personnel had 4 year degrees? I'm talking about the guys maintaining the lines / switches / routers. Not very many at all. The guys in charge often did, but even that wasn't guaranteed. I, personally and through company programs, trained many High School kids on the intricacies of R&S. Try getting in today without at least a 2 year degree. A 4 year degree will be preferred, if not required. Heck, even help desk which is entry level, often requires a 2 year.

      Companies drove us here because a 4 year degree student is "better" even if it doesn't really matter.
  • Of course (Score:5, Insightful)

    by TheSpoom (715771) <slashdot@ u b e r m00.net> on Monday October 24, 2011 @09:39AM (#37816266) Homepage Journal

    Because deregulating financial matters always ends well.

  • by teambpsi (307527) on Monday October 24, 2011 @09:40AM (#37816270) Homepage

    I don't want to be "that old guy" -- but I didn't qualify for student loans in the 80's & early 90's because my parents were in that bracket where they were supposed to be able to contribute, but just couldn't.

    I had up to three part-time jobs while doing my undergrad, and I definitely wanted the education -- I found that as "consumer" I demanded more from my instructors for my hard earned cash.

    In the end it made me who I am, and I subsequently went on to get both an MS in Software Engineering and an MBA recently -- both paid for with cash that I earned and saved.

    Sure it took a little longer to finish the degree's and barring Alzheimer's, the lessons learned all around will be mine for life!

    • by Oswald McWeany (2428506) on Monday October 24, 2011 @10:12AM (#37816974)

      I had it easier than you- 90% of my schooling was paid through scholarship and grants- of the remainder my parents paid some towards my school- and I worked 35hrs a week (just one job... but year round) for the rest of it. I emerged from University with no loans.

      I HAD to complete it in 4 years because of scholarships- I didn't have the option of spreading it out over more time to spread the burden. So despite major scholarships I still worked full time in order that I could live a meagre existence of 50cent microwavable mini-pizzas and TJ Maxx clearance clothes- I hit the jackpot on super cheap rent- paying only $250 a month- a great place with free cockroaches and lead paint.

      Had I not had the scholarships- I couldn't have done it. Had I not had support from my parents- I couldn't have done it.

      This was over a decade ago- since when costs have skyrocketed.

      College now costs more than what an uneducated full-time worker makes.

      You might have been able to get by in the 80s working jobs to pay your way- nowadays kids don't have that option.

    • Congratulations for working your way up. You worked hard to get where you are today, and I salute you.

      But now, doing what you did is essentially impossible:
      * Average annual in-state tuition, room and board at a state university, books and basic supplies - $7600+$1100+$2000=$10,700 (numbers from the College Board [collegeboard.com]. Private schools are about 3 times that cost.
      * US minimum wage: $7.25 per hour. After taxes, about $6.00.
      * So weekly hours worked to earn your way through school: $10,700 / $6 / 52 (weeks per year) = about 35 hours per week.
      * Being a student requires basically full-time hours, so schoolwork takes up about 35-40 hours per week.
      That leaves, of your 168 hours in a week, 94 hours for everything that isn't working or studying. If you assume 8 hours of sleep a night, you have a total of 5 hours a day to do everything else: eating, dressing, laundry, cleaning, bathing, traveling to and from work and class, etc. Your only chance of relief would be the summer, where you might be able to live with your parents. I've worked those kind of hours for short bursts, but the human body simply can't handle that over long periods.

      And of course this all assumes that minimum wage jobs are available in your area, which is probably not true at the moment.

  • Fixing Student Loans (Score:5, Interesting)

    by sanosuke001 (640243) on Monday October 24, 2011 @09:40AM (#37816286)
    Student Loans should include two things:

    1. Fixed low-rate loan (2-3% even for private loans)
    2. Allowed to be paid with pre-tax income (like money put towards retirement etc)

    If they want to remove the government's involvement and make it private only, these rules should still be added. We should be helping student's get through school to make this country a better place.
  • by assemblerex (1275164) on Monday October 24, 2011 @09:40AM (#37816290)
    All of the sudden all the schools cost $60,000.
  • by technomom (444378) on Monday October 24, 2011 @09:42AM (#37816310)
    He'd better have a plan for the huge bubble he's about to create in between the time when federal loans are cut off and colleges/universities actually lower their prices. It's easy to say these things on paper, but there's always a lag and that's where the problems start. See the Medicare "Donut Hole" for an example of that.
  • by RazzleFrog (537054) on Monday October 24, 2011 @09:45AM (#37816370)

    Of course, the best solution to the shrinking middle class is to not educate the poor and lower middle class. Let them be happy with their barely literate high school education and mind-numbing menial labor jobs (which by the way are in other countries now).

    Do the Republicans have any sane candidates? It makes being and independent really tough.

  • by Anonymous Coward on Monday October 24, 2011 @09:47AM (#37816422)

    The reason a broken leg costs so much to fix is that the doctor, nurse, and hospital administration are all paying student loans. On top of that doctors are having to pay for insane insurance coverage.

    If getting an MD wasn't so expensive then healthcare wouldn't be so expensive. I hate that we're always talking about how we pay for healthcare instead of how to make it cheaper.

  • by eepok (545733) on Monday October 24, 2011 @09:53AM (#37816536) Homepage

    The Federal Student Loan program definitely increases the total cost of education... well... in a way. What it does is guarantee private (and public) businesses and departments revenue in the case of price increases.

    Corporately-controlled housing is very aware of this and that's why rent is constantly and significantly going up around universities. When housing prices go up, the financial aid office figures it out, and financial aid awards are adjusted accordingly. Same with the general price of books, fuel, staff, administration, and faculty. But all that means is that when costs go up (either by choice or not), more loans are pulled out for each student and the students have to pay off even more in the future.

    So yes, it's a problem. But the elimination of the Federal student loan program would only open up the field to private banks... and we already tell our students to do everything possible before getting a private bank loan. They're ruthless with their interest and pay schedules.

    What's the solution? Here's a start. It just MAY be based on my experiences...

    Step 1: Each public university (or uni. system) should have a salary cap on all administrators. The highest anyone should be paid for helping to run a public university should be $250,000 (at the system level. Local administrators should be capped at $150,000. Faculty should be capped at $125,000. Staff should be capped at $75,000.

    Step 2: Universities should be directly involved with negotiating rent controlling the area around the university so that staff and students don't NEED so much money.

    Step 3: For those universities with sufficient land, focus on on-campus housing and DO NOT make "luxury student housing". Nor luxury staff housing. Go utilitarian. Civil engineers know what people want and need. Students do not need brick portico entrances to their dorms.

  • by fuzzyfuzzyfungus (1223518) on Monday October 24, 2011 @09:54AM (#37816552) Journal
    On the one hand, it is not at all difficult to see the unintended consequences(or, in some cases, quietly intended consequences) of federal student loans being so widely available.

    The overtly scammy private colleges(you see ads for them plastered on subway cars, among other places) that make grandiose and generally overblown claims about their "career placement" abilities and rates, are one major beneficiary of this unintended(for them) subsidy. The rate at which first-gen-to-college easy marks get played for a few semesters and then dumped without measureable increase in anything other than debt is alaring. The more traditionally respectable colleges are less overtly evil(since they can, if you play your cards right, actually offer an excellent education, and they generally avoid stooping to any explicit claims about economic advancement, in favor of letting broad cultural messages about how people without college degrees are all kinds of fucked do the job for them); but federal loan system gives them a downright beautiful price-discrimination mechanism: Just set the "price" to $$$$$, and then Oh-so-kindly reduce it to more or less exactly what they think you are capable of paying(as proven by the various documents-upon-which-perjury-is-a-bad-plan that your FAFSA will refer to). Clever, that. One also cannot refrain from speculation as to the role of our oh-so-saintly financial services sector in the creation of yet another class of debt(conveniently government backed, and non-dischargeable in bankrupcy!) to play their games with...

    On the other, though, I think that he is out to lunch. The real wages to relatively unskilled workers(ie. the sort of job you are likely to be working while shooting for a college degree, not the sorts of jobs that you can get after you have one, or the sorts of jobs that require reasonably prolonged job experience('upper-blue-collar' apprentice-track stuff, say, whic can actually pay pretty well; but is not clearly compatible with the trajectory of people working themselves through college) have been treading water, or worse, for something like four decades now. The real wages and job prospects of college graduates also haven't been doing so hot(though better than those of non-graduates). Unless the magic invisible hand fairy has a plan for dealing with the unimpressive and declining availability and financial returns on basically all middle class activity, We Have A Broader Problem. Never mind, of course, that some of the purported economic gains to a college education are likely artefacts produced by the signalling function of graduating(ie, Person X can follow instructions, Person X is not a total fuckup, Person X can work with others if necessary, Person X has an IQ higher than his shoe size), rather than by intrinsic improvements provided by education.

    Federal loans have certainly increased the speed at which college is able to get expensive(just as the real-estate bubble increased the speed at which McMansionites were able to pretend that their tenuous grip on affluence wasn't slipping away before their eyes); but it isn't as though that occurred in isolation. Even with the cash available, taking on a huge stack of debt and cracking books for 4 years would be a lot less popular if there weren't such a strong impression that not doing so was a one-way ticket to ditch-digger class...
  • In a perfect world (Score:5, Insightful)

    by milimetric (840694) on Monday October 24, 2011 @09:55AM (#37816596) Journal

    I love Ron Paul. He's the most idealistic person I've ever known. He's basically lying to everyone though. Most of the things he says go like this:

    1. Cut funding
    2. ??? Allow free market to do it's thing ???
    3. Problem solved

    He doesn't mention two crucial things. One is that step 2. may take a very long time. The other is that for 2 to happen effectively, we have to equalize any unfair and corruption-driven advantages that others have gained in a crooked system over two hundred years. Once highly paid yuppies get busted for illegally claiming "expenses" as tax free money and corporations get busted for gambling with pension funds at the same rate that people get busted for stealing a piece of bread or robbing a grocery store, then we'll have a truly fair environment for the free market to do its thing. In the meantime, Ron Paul is selling pipe dreams. Awesome pipe dreams, but ultimately dreams without good plans to back them up.

  • by spinninggears (551247) on Monday October 24, 2011 @09:57AM (#37816626)

    In California, since the 1970's, the state has subsidized less and less of the tuition for students, while student loan amounts have not been increased substantially, and yet the state universities have not gotten less expensive in the process.

    Sometimes Ron Paul says things that are correct, but silly (like how we could lower health care costs by removing the requirement medical providers be licensed. Probably true, but....) Mostly though, he just says things that are incorrect and silly. His supporters piece together some sort of reality from this that makes sense to them, I guess.

  • by Moof123 (1292134) on Monday October 24, 2011 @09:57AM (#37816634)

    As usual the symptoms are blamed, not the cause. Colleges have had a breakdown in funding models (used to be heavily subsidized by state government), so now they are forced into passing the costs to the students. High tuition at state colleges has resulted in there being no low cost options, necessitating very large loans be offered.

    Now, in general I'd argue our colleges are broken in many other fundamental ways (same price for a much needed engineering degree and an unneeded philosophy degree? WTF?), but that is a whole different rant.

  • by Charliemopps (1157495) on Monday October 24, 2011 @09:58AM (#37816642)
    The difference between federal student loans and private loans is rather simple. Federal loans are given to people even if they can not afford to pay them back... and you are required to pay them off. The government will get their money back, period. The result is people that are already impoverished, becoming even more impoverished. Now, not only are they poor, the odds are they didn't graduate (most, irrelevant of income, do not) and now they are saddled with huge amounts of debt that they have no legal way out of.

    I paid my way through college via a part time job. I didn't go to the best school, but I didn't need to. I think that needs to be the focus of everyones attention. A $200k education isn't 10x the quality of a $20k education.
  • by Chuck Messenger (320443) on Monday October 24, 2011 @10:14AM (#37817018)

    Some points to consider:

    Total outstanding student loan debt recently topped $1 trillion (e.g. see link [time.com]).

    Student loan debt now exceeds household credit card debt (see link [www.good.is]).

    It isn't possible to escape student loans via bankruptcy - they will follow you your whole life, no matter what. This puts them in a class by themselves.

    Obviously, the current system is badly broken. Why should the federal govt be in the business of hooking young adults on these onerous loans? If the goal is social leveling (a goal I can get behind), then we should be talking about grants, not loans. What we're doing is creating a new class of indentured servants.

  • by Panaflex (13191) <convivialdingoNO@SPAMyahoo.com> on Monday October 24, 2011 @10:48AM (#37817738)

    Anytime a government subsidizes a product or service - the price will increase to match the subsidy. Period. The producers know how much the subsidy is(A), and how much a consumer can spend(B). They will always add a+b in the end because the elasticity of price can be known to support that level.

    There isn't even an unknown pricing curve here - the University already knows your finances when you apply for financial aid. They can simply and easily price an education to target the population of students they want.

    How many (fiscally) bankrupt universities have you seen lately? I only know of Huron University in South Dakota in 2005.

    http://en.wikipedia.org/wiki/Category:Defunct_universities_and_colleges_in_the_United_States [wikipedia.org]

  • by ansak (80421) on Monday October 24, 2011 @10:57AM (#37817926) Homepage Journal
    Disclaimer: I am a Canadian, so I do not have a dog in this race; except we are your nearest neighbours (nearer than México in two minor ways only: longer border, no local outcries for a fence) so if you systematically self-destruct, it'll be bad for us, too.

    Support for Ron Paul by the young and sometimes geeky has intrigued me for some time. Is it a result of reading Ayn Rand? Is it because his ideas seem so much more sensible than so many others? Is it because he does not appear beholden to any lobbyists? Is it primarily because he wants to end drug Prohibition? Possibly all of the above.

    But it's also confused me because a number of the things Ron Paul wants to do away with are things that help the young find their first footholds -- things like student loans (or even grants). When I read this headline, I thought for just a second that perhaps Dr. Paul wants to throw open the universities for all, call a full education a civil right that you get to take advantage of based on merit. But I dismissed that thought before I saw the rest of the post, and I was right to do so. My response: his analysis may have some truth in it but it's so simple as to be suspect, in my view. On balance, like much of what Ron Paul says, it's too simple to be right.

    Whoever thinks Ron Paul is cool, whatever lobby groups he is not beholden to, make no mistake: the über-rich and powerful wish his ideas well because their adoption would entrench and deepen the growing class divisions in America and put an end to the American dream as anything but that: a wistful dream of what expectations used to be.

    Something is rotten in the way the US is going these days. For instance, in my lifetime, before 2008, I had never heard a leading politician in the US say of their president from the opposing party that they wanted him to fail. Whether you agree with Mr. Obama or not, that attitude on the part of any member of your government is pernicious. I'll stop there because the list of things going wrong is so long (most of them decades in the making) as to make this too-long post ridiculously so.

    But Ron Paul is not the answer to those problems: his ideas (and incidentally those of the Tea Party) are only going to help the rich get richer and inherit the meek (and the not so meek). Do yourselves a favour, folks, and elect leaders that remember what they learned in Kindergarten (without forgetting all the things they learned since) and value their neighbours over hard lines -- internal neighbours, of course! I wouldn't advocate that you would elect the people I, your Canadian neighbour, want you to elect. I'm just confident that if, overall, you voted in line with your interests (and that may take a lot of thinking to figure out who's going to serve those best) and do well, then you won't become neighbours that we have to fear from across that longest unarmed border in the world.

    be good to each other, folks...ank

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