OBAMA LIED ABOUT COLLEGE LOANS - LEARN THE TRUTH HERE

Submitted by: Donald Hank

 

50% college grads unemployed:

http://www.koaa.com/news/50-percent-of-grads-unemployed/

Grads earning less now:

http://pundithouse.com/2011/06/college-grads-still-unemployed/

Recent data grim:

http://houston.culturemap.com/newsdetail/04-23-12-graduating-from-college-dont-expect-a-job-53-percent-of-grads-under-25-unemployed/

Studying in UK a cheaper option?

http://www.thisismoney.co.uk/money/saving/article-1708861/How-do-costs-of-UK-and-US-universities-compare.html

 

Let colleges take some of the heat if student loans don't pan out. We all know that BS or BA degrees in, say, psychology, are a dime a dozen and the chances that these degrees will pan out in the form of high-paying careers are on the slim side (these grads get jobs, but most are low-paid. The colleges know that, but no one is talking about that. After all, they have to pay the salaries of the psych profs and that requires a fresh batch of suckers every year or these poor folks get the boot -- exactly what they deserve for scamming students.

Now if the colleges were required to paste a warning label on their course offerings -- such as "graduates in the field of anthropology have a 20% of finding employment in their field within 2 years of graduation"--then that would help the students.

Passing draconian laws that make it impossible for grads to shed this debt by filing for bankruptcy do just the opposite.

But the free market is still at work. The more parents and students learn about this scam, the fewer will take out the loans.

 

 O’s college cop-out---- Here’s a real student-loan Rx

Glenn Harlan Reynolds

With student-loan rates set to double, President Obama has been busy posing as Mr. Fixit. Too bad it’s just a pose.

The country has a serious student-debt problem, and also a student-loan problem. But they’re two different things.

The student-debt problem is that too many students are borrowing too much money to finance educations that won’t earn them enough to repay the loans. This leads to misery.

A recent Wall Street Journal story noted that many students are postponing marriage, children and home-buying because of the difficulty — in some cases, the impossibility — of keeping up student-loan payments.

This is bad for them and the economy, because they won’t be available to soak up the excess houses built during the housing bubble, which also was fueled by cheap government loans.

If they postpone having kids, fewer taxpayers will exist to fund Social Security and other programs in a few decades.

If these younger people had gone into debt flipping houses in 2005, they’d be able to declare bankruptcy and get a fresh start — but the law doesn’t allow that.

Student-loan debt is treated like child support, meaning that it’s almost impossible to get out of. People who paid six-figure sums to universities that happily pocketed the money in exchange for gender-studies degrees that would never produce a job are now debt slaves, like the coal miners in Tennessee Ernie Ford’s “Sixteen Tons.”

Although 37 million adults owe student loans, only 39 percent are actually paying down balances. Some 5.4 million have at least one loan past due; loans totaling $270 billion are at least 30 days delinquent.

These numbers are likely to climb in coming months and years as US job-creation remains stagnant.

It’s a big crisis, all right, but Obama is doing nothing about it. His lower-rate plan would apply only to new loans, and only to loans taken out under the federal Stafford Loan program. He’s not helping previous borrowers get out from under their mountains of debt. He’s helping new borrowers build their own debt mountains.

In fact, another Obama policy is adding to the woes. Back when Democrats ran Congress, the president engineered a federal takeover of student-loan processing. Now the Chronicle of Higher Education reports that this is producing huge paperwork screwups that have thrown thousands of borrowers into default, more than doubling the number of defaulters since December.

What would a serious student-loan reform look like? Well, it would look more like normal loans. Students’ ability to borrow would be based on the likelihood that they’d be able to pay. Plus, loans would be dischargeable in bankruptcy if things turned out badly.

Right now, student loans are sold on the basis that “college” promotes higher earnings. But “college” isn’t an undifferentiated product. Some degrees — say in Electrical Engineering — increase earnings dramatically. Others — in, say, gender studies — not so much. A rational lender would be much more willing to finance the former than the latter.

Oh, and in ordinary credit transactions, creditors bear some risk. Loan someone money that they can’t pay back, and you take a loss if they go bankrupt. In the housing bubble, this discipline broke down because the people writing the loans weren’t going to hold on to the mortgages. Similarly, colleges today get their money upfront; if the student can’t pay it back, that’s someone else’s problem.

Let’s give colleges some “skin in the game” by making them absorb the loss, or at least part of it, if students can’t pay. Perhaps if students can’t pay their loans by 10 years after graduation, they should be allowed to discharge them in bankruptcy, with the institutions that got the loan money on the hook for, say, 20 percent of the loss.

You fix a malfunctioning credit system by ensuring that the people who can control the risks are the ones who face a loss if things go wrong. Obama’s interest-rate “fix” does nothing like that. It just pumps more hot air into the bubble. That’s not a solution, it’s doubling down on failure.

Glenn Harlan Reynolds is a law professor at the University of Tennessee. His “The Higher Education Bubble” hits stores next month.

http://www.nypost.com/p/news/opinion/opedcolumnists/college_cop_out_h79hXHJolPkpAWOllC7MPI#ixzz1tWhvj4Gy