Reply to WTF? Govt rewarding bad behavior Part II

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[quote=Anonymous][quote=Anonymous]Students loans should be limited. Maybe 7k a year with a total loan amount of 35k? Now that would change things. The universities and colleges keep increasing fees and tuition in large part b/c they know the students take the loans. People are graduating with 100k in debit. [/quote]

You got to it before i could.  Tuition keeps rising because the amount of subsidies and aid has drastically increased over the past 10 years.  People asked what this has to do with the 'mortgage/banking crisis', etc.  Well---it is a lot like it. Keep doling out people money that they will never have the ability to repay.  Kids take the money without assessing options...perhaps they don't need to go to the most expensive private school...there is financial advice that says best bang is to transfer in from community for final 2 years, there is the option of state universities.  Nobody really teaches a kid that taking out an $150k loan may not be the best for their future.  Go up to off-topic and you will read numerous posts from parents stating they are putting nothing away for their kid's college educations even though they are in the top 1%.  They'd rather keep up with the Joneses and live for today.

The official student loan default rate, according to the government, is now seven percent. That rivals the default rate for credit cards (8.8 percent) and home mortgages (9.1 percent). Because the government is lending most of the money, [i]every default leaves the taxpayers on the hook[/i].

."The schools keep the money, the students keep the debt, and the taxpayers lose," said Sen. Tom Harkin, D-Iowa, who chairs the Senate Education Committee. [b]"There's a lot of similarities between what's happening with student loans ... and the housing crisis."[/b]

"An increasing proportion of the cost of college education is paid for with federal aid, much of it in the form of student loans. Between 1999 and 2009, total federal aid to college students rose from $61.1 billion to $116.8 billion, according to the College Board. Including state aid, total government subsidies nearly doubled from $66.6 billion to $126.2 billion. Indeed:

•The average amount of a federal student loan increased 180 percent from 1990 to 2008, after adjusting for inflation.
•Students borrowed $1,637 in federal loans (in 2008 dollars) during the 1990-1991 school year, on the average.
•By contrast, students borrowed an average of $4,585 during the 2008-2009 school year.
As a result, during this period, the portion of average tuition and fees at a four-year public university financed by federal loans rose from less than 60 percent to about 75 percent.

Rising government subsidies have increased the quantity of education demanded. This means that the rising cost of a college education is due in large part to the increased financial aid available rather than any general improvement in the quality of education."[/quote]

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