on college being free

TL;DR: the solution to the student loan crisis cannot be sustainably solved by making college free, but it can solve many problems at once by heavily regulating student loan interest.  the set of problems solved by this approach are many: college has value and value should be paid for, students still have skin in the game, banks still make enough money to cover the cost of administering the loans, and it allows the 40-50 year earnings of graduates to be used productively, driving the whole economy, and not simply funnelled back to banks at rates that go many times further than the money originally loaned.

 

make something free and watch people treat it like it has no value. 

an education from college, university, trade school, or apprenticeship is a thing of value. it prepares young people with the mindset and skllls they need to be productive. that productivity has value, therefore the education that got them started down the path has value as well. after our constitutionally guaranteed primary and secondary educations, up to the age of 16-18 or so, young people have several choices on what to do next to prepare themselves for the rest of their life path. 

it’s an essential part of their commitment to their own life that they invest in themselves. to reap the greatest rewards, requires the greatest investment of time, effort, and yes, money, the latter is of course compensation for the time and effort educators provide. 

individual and society, a shared commitment

a college or trades education beyond high school should cost the student a fair amount of money, along with the commitment of time and effort to the learning process. while it benefits society to have the highest educated and skilled workforce possible, society’s collective commitment to the process shouldn’t include footing the entire bill. that teaches future parents nothing about savings, and tells students and everyone else in the process that an advanced education is owed to them, or worse, that it has no value.

fix student loans, you fix a lot of problems at the same time

the problem with student loans today is that the interest on them creates a cycle where a monthly payment they can afford doesn’t even cover the interest. 

the student keeps paying, a lot, for many years, and the balance due continues to go up. in the end, after 20 years, the remaining balance is written off (who knows who eats that, probably taxpayers), and the student is left to pay full taxes on the written off balance, often to the tune of 4, 5, or even 6 figures. 

meanwhile the banks have for decades extracted the maximum profit possible.
in other words, schools, students, and taxpayers are the losers. banks are the only winners.

it's sort of like how trump has done business. leverage finances to build something big, generate as much revenue as possible, pull out as much profit as you can, run the business until it starts losing money, protect yourself using very legal bankruptcy laws (those laws, btw, bought and paid for by the businesses who abuse them, so that, hey, at least it's all "legal"), walk away, and let the government and taxpayers clean up the mess. "privatize gains; socialize losses", yep, this is the person we elected to clean up government, and run it like a business. nice huh?

ok back on topic...

possible solution

is there a solution where banks still make money, students invest in themselves, and taxpayers pay much less than they do now? i think so.

here’s what government can do

the government should invest in the cost of advanced education by going back to heavily regulating the interest that banks can charge for student loans. i’m no financial wizard, and who knows if this is true, but in this digital age it’s hard to believe that it would cost a bank more than 1% annually to administratively process the maintenance of a student loan. that 1% could be regulated by the federal government, who could at the same time provide incentives to banks for writing loans based on quality and quantity.

rather than pouring out billions annually in grants to students, pour a fraction of that into subsidizing the 1% interest to the banks for 10 years.

here’s what students can do

they can now afford to pay for their entire education themselves. 

they can use parents’ savings, money they earn while attending school, or when those fall short, taking out 0% interest loans that cover tuition, room, board, books, and fees. 

after 10 years of 0% interest, whatever balance is left, the student can continue paying, and tack on the 1% going forward. incentivizes them to pay off the loan sooner.

what might happen as a result:

• moving from grants to interest subsidies, government costs for student tuition might go down considerably
• government can eliminate tax deductions for student loan interest
• students pay for their own education fully; they own the whole thing, paid off at 0% interest in a time frame they can
• banks stop profiting billions off the backs of students, unchaining them from the financial industry revenue stream. i’m all for banks investing and making money. just go do it somewhere else.