Ron Paul has a point – but only one
Ron Paul wants to get rid of your student loans! Well, no, not your student loans, per se. He has no plan for assisting those of us already drowning in debt. In spite of asserting that it’s a failed system that has basically screwed an entire generation, Paul still wants us – the screwees – to pay up. The change he wants is to eventually nix the program completely.
Part of Paul’s reasoning is that the federal student aid program, by ensuring that nearly anyone can go to college, increased the cost of education astronomically:
“Like housing and medicine, education costs went through the roof when government became involved. In the last three decades, the overall inflation rate has increased more than 100%, which means we basically pay double now for everything we buy. This price inflation is an inevitable consequence of printing money out of thin air and devaluing our dollar. But compare this inflation to the rise in the cost of college tuition, which has increased almost 500% in the same amount of time.”
Paul has a point here – it seems clear that access to student loans has, over time, created an education “bubble” of sorts. Colleges and universities responded to increased funding by hiking the costs of education, just as the housing market responded to increased access to mortgage loans with higher housing prices.
However, as per usual with Paul, his solution to this problem is no real solution at all. He doesn’t want student loans to go away completely – rather, he simply wants to move them to…wait for it…the private sector. Man, that guy is predictable. Of course, as anyone who has read this site or any other site or article dedicated to discussing the student loan problem knows that, however bad government lenders are, the private lenders are far worse. At least most government loans have deferment, forebearance, and income-sensitive repayment plans. Try calling Citibank and asking them if you can pay them back in five years when you make more money.
And, of course, Paul can’t help himself when it comes to taking jabs at lower income Americans. Here he is saying that poor people don’t have a right to higher education under the guise of pretending that he cares about poor people:
“Why should people who are laborers who never get to go to college, why should they be taxed to send some of us through college?” Paul said Sunday on CNN. “So it’s not even a fair system when it works. But obviously it doesn’t work and that’s why it’s coming to an end.”
Um, aren’t student loan programs there precisely so people like “laborers” can go to college or send their kids there if they want to? For him to suggest that the plight of other lower middle class people in this country would be somehow improved by NONE of us getting to go to college is absurd. To me, this is an attempt to divide and conquer – as when politicians pretend that the reason some poor people don’t have healthcare is because other poor people do.
Nonetheless, the point stands that colleges and universities have taken advantage of the increased revenues from more students being able to attend college via student loans. But the solution isn’t to privatize the student loan industry – after all, the colleges and universities would still get there money – it would just be from a different source and one that is even more onerous to borrowers. The real issue here is that no one has held the colleges and universities accountable because, like the other bubbles that have recently burst, no one seemed to predict these results. But if you suddenly take away access to student loans, I find it very unlikely that colleges and universities are going to cut their tuition to pre-1980s rates. All that’s going to happen is that many more students won’t be able to go to college at all, and those that do will be saddled with student loan debt from a source far less friendly to their economic hardships.
I’m not going to pretend I have a miracle solution to the current crisis, but I can say this for sure: Ron Paul’s plan will only make things worse.