February 28, 2008
Educators have long been concerned over the heavy loan debt carried by students once they leave school. Their primary concern is that the loans constrain the work choices the students have once they graduate. In other words, students cannot take "public interest" jobs and must, horrors, go to work in private industry to pay back their loans. Like most redistributive arguments from the left, the argument assumes the existence of the loans. That assumption is now in question. One of the largest student loan agencies, the Penn. Higher Educating Assistance Agency, is suspending student loans, even if backed by the federal guarantees. The collapse of the securitization market makes it impossible to cash flow the business. In the past the loans were packages and resold and the new money was used for new loans. Now the loans cannot be resold at reasonable rates and there is little new cash for new loans.
So now students may not have to worry about repaying loans; they may not be any. Students that do not have the cash to go to school must work before school in, I daresay, private industry, to raise cash to go to school. Public service jobs will not support future tuition just as they did not support past tuition.
Educational institutions could attempt to take up the slack by turning into loan companies, a task for which they are not designed and will not do well, but the amount available will be slight compared to the amounts that were available in the private market. Government could step in the loans and we would have another huge, very expensive government system to fund and monitor all in a time when government budgets are stretched to the breaking point. Higher taxes anyone?.
Another hard lesson for the left--be careful what you complain about you may lose it.
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Why can't the government raise the limits on subsidized and unsubsidized loans? Currently, a law student can max these loans out and still not cover tuition, not to mention books, living expenses, etc. While the government is more than happy to help out citizens that made poor decisions to purchase homes with ajustable rate mortgages (and lower interest rates), my student loan interest rate is currently fixed at 6.8%. Maybe the decision to attend law school was my bad choice.
Posted by: Student | Feb 28, 2008 9:33:59 AM
Business loans are a staple nowadays for small businesses. Success doesn't come easily especially to those who are venturing out for the first time so loans come as a necessity to keep things going. Thanks for the info!
Posted by: Sofia | Feb 29, 2008 2:23:04 AM
Well Well, I took a NSL out in 1978. In fact I had 3 kids was divorced, never recieved any child support,was on the food stamp program. Nevertheless this happened to many young women in the same predicament.Our Social Workers talked us into going to school, rather they said you must. I love my freedom I do not want to be made to do anything I do not feel comfortable with..I went from Hungtington Beach to a small school with only 6 classrooms, in Anahein. The Head Hoincho( the silver fox) his nickname,Said just sign here you well be given this money$878.00 to buy all your books, pay your rent, buy your white uniforms and shoes, and all your supplies. I looked for the money I still am I never recieved it. I went to school for 6 months in 1978 was suppose to graduate with a certificate in Medical Office Assistant. My loan has soared up to and past $4000. Now I can not go to schoolhere in Oregon, 3 years ago they told me I could attend college If I agreed to payback $ 10 a month.
Now the money is coming out of my SOCIAL SECURITY DISABILITY PAYMENTS. This is every month now. I never got a certificate from the school, so could not work in that field. I was absent 4 days out of 6 months for a funeral. Now I do not believe I should payback the NSL. I have taken all those nowhere jobs and never could save anything to even go back to school with. I am in the same level any 18 year old is in graduating form High School and looking for low income jobs or work except I am 58 years old...Eileen
Posted by: eileen | Apr 7, 2008 11:08:45 AM