Total Pageviews

Monday, March 24, 2014

Government Complicity In The College Tuition Bubble

This has nothing to do with the quality of the schools or the standard of the education students receive. It has everything to do with Government intervention in the marketplace. Did you ever think about how a person with no credit or colateral can borrow $200,000.00? In a normal market, they can't. How can colleges continue to charge insane tuition if there is no way for a person to pay for it?

Well there is...enter The Government. They will lend you ANY AMOUNT it will take to pay for college. Without the Goverment and the taxpayer money behind them, colleges would not be able to get these outlandish tuitions and they would have to streamline. Under the present structure there is no incentive to do so and the costs continue to rise. And why not, it's not like you can't get the money to pay for it, right? It is an artificial economic prop and it can't be sustained. It is a bubble of the Government's own making. 

The solution is to get Government out of the student loan business. The last time I checked, there is no provision in the U.S. Constitution that gives the Federal Government the madate or reason to fund peoples college education. What they are doing is against logic and market principles and as we see now, they haven't done anybody any favors.

Just like the housing bubble, college tuition credit is way over what the market is generating for a college educated worker. What we are seeing now is bank tellers and waiters with college degrees and $60,000.00+ in debt burden. What are they going to buy with that much debt? Not much. They are now removed from the economy until they can get that debt under control. It has nothing to do with payment options. You either have the money or you don't and these kids don't. It's not coming in so they can't pay it out. You can't get blood out of a stone.

So of what value is a college education if there are no jobs to take advantage of an advanced and educated workforce? The ends do not justify the means.

If you are carrying a 6% interest rate or more (up to 9.37%), that's a mortgage. A 30 year mortgage. I know people in their 40s with good jobs who still owe $20 to $30K. This is what you've got to look forward to kids. Perhaps the government can take the payments out of your Social Security checks.

We are starting to see this insidious debt creep in the housing market. Couples, both with outstanding college loans, are not qualifying for mortgages. The government already tried that mortgage give-a-way thing and that didn't work out too well so I wouldn't be expecting them to get in on that deal again so these potential buyers with no potential aren't going to be getting any help from them.

The job market cannot sustain all these people with such debt and something has got to give. The College Tuition Pyramid Scheme will unravel.

It can do nothing else.

No comments:

Post a Comment