Tennessee Ernie Ford sang the tune, “You load sixteen tons and what do you get? Another day older and deeper in debt. St. Peter don’t you call me cause I can’t go…I owe my soul to the company store.” You see companies would work you and pay you in scrip. The scrip was good at the company store where you could buy food and other items. The gimmick is that the more you work the more you got into debt. You were basically a slave.
Here is the new song for our generation – “You take fifteen credits and what do you get? More indoctrination and deeper in debt. St. Peter don’t you call me cause I can’t go…I owe my soul to the federal government.”
So how did this happen? There are three ways colleges get money – tuition, grants, and taxes. Public colleges want to grow just as much as private colleges. To grow means more faculty, nicer campuses, better artwork, libraries and laboratories. At some point, tax support competes against other things. Parents and kids can only spend so much because they only have so much. Enter the student loan era. Have the parents and children go into debt so they can pay money they don’t have. It increased college growth and tuition costs by 400 times the rate of growth of the economy.
Then the federal government looked out and realized that banks were making a profit. The federal government likes to get taxes and not have to compete with the private sector. So in 2010 – in Obamacare – yes the healthcare law, Congress and the President took away the ability of banks to issue student loans and had the federal government do so instead. They said it would be more affordable for the students. In reality, the Consumer Financial Protection Bureau estimates that there 38 million student loan borrowers in the United States and the total debt load has passed $1.1 trillion. The Project on Student Debt has estimated that 66 percent of graduating college seniors in 2011 had some student loan debt, with an average balance of $26,600.
Bottom line – the federal government took over a program that was making $51 billion in profits each year. That money now goes into the federal coffers. But of course that brought down costs for students right? Of course not, the government bureaucracy always wants more. $51 billion that the greedy banks got is not enough, we need to raise interest rates on loans from 3.4% the greedy banks charged to 8.75% through the federal government. That would have raised “profit” to the federal government to over $131 billion per year so they could spend it on more programs. It would have also helped out colleges who get a piece of that back.
Students protested, so the benevolent Congress brought the rate down to 4% for a few years, with a guarantee it won’t rise over 8.5%. Wow. Now you are supposed to thank them for saving you. There was once a huge differential between earnings of a college graduate and a non-graduate. Now those differentials only exist in key fields. Many technical schools are churning out high paid workers with little or no debt. So the government understands that right?
Of course not. The federal government is using its control over students to force them into fields and areas of its choice. Want to pay off your medical student loans? Ok, be a general practice physician in one of the underserved areas. Or join Americorps or whatever new program we devise. It’s the old company store. Get your education from government, owe your life to government, do what government tells you. Don’t want to play? Then the IRS suddenly gets interested in your delinquent debt and all the tax consequences.
Any time the government tells you they are taking over a chunk of the private sector to protect you from greedy businessman, know what is going to happen next.
Michael Bradley - Time Traveler 