- Joined
- Jan 14, 2016
- Messages
- 223
- Reaction score
- 353
Very well said. I can't like this enough.6%-7% interest isn’t the problem. Loan sharks, I will admit I am not totally familiar with their interest rates, but I understand they are much higher with some implied penalties that can be quite painful.
Given that an 18 to twenty I something year old with no credit history, no job is by definition a high risk loan, 6%-7% isn’t bad.
On one hand, a generation has been brainwashed that it is extremely important to go to college, and any degree at whatever cost will pay for itself. This has been supplied by easy loans to students by the government, and colleges and universities have happily taken the money. They have done things to make college more appealing with increased costs because the consumer doesn’t feel the costs because of the easy loans. Most applicants probably couldn’t tell you their expected rates of return, the total cost of their loans, or that most schools graduate about fifty ish percent in 6 years. Or that there basically is no rate of return for going to a private school.
On the other hand, we as a society need people to fulfill their contracted obligations. Even dumb decisions. There are a host of people that prey on the desperate, and the financially illiterate. Credit cards, sub-prime loans, payday loans. 18 y/o can make a lot of poor decisions. I think this student loan Crisis is a reflection of poor parenting as much as anything else.
I am in favor of the government getting out of the student loan business all together. I think student loan forgiveness without reform is wrong. People who have made poor decisions don‘t have zero responsibility. In many cases they have been deceived or manipulated.
This isn’t a simple problem. There are no good simple solutions. Giving away 1.7 trillion dollars, largely to people with degrees seems to not be the right solution to me while continuing to loan them. This will simply encourage people to borrow more foolishly.
I can't personally speak to loan sharks but I would like to believe they function similar to the ones on the movie Rounders. If you have not seen it I highly recommend.