Many will say, it is your responsibility to pay back your loans, but this logic skips over the responsibility of the government and the society as a whole to provide affordable quality education as an alternative to debt. In fact, what the government appears to have done is funnel the money needed to keep tuition costs low away from state colleges and universities and put this money instead into more and more student loans. The predictable result is that tuition costs have risen, requiring students to shoulder more and more debt to pay for ever increasing education costs.
In the meantime, Congress quietly passed a law supported by banking lobbyists taking away all consumer protections from student loans. Importantly, under the new laws, there are no time limits for collecting the debt.
What would motivate the government to hand such a wonderful present to eager, young students and their families--money, of course.
By taking the money needed to fund college in the first place and using it as loans to students, government can claim to support higher education while quietly pulling the funding rug under public universities that in turn need to raise tuition on students.
The private banks that lend to students have used Congress (and Congress has used the private banks) in support of mutual interests. The government pays far less for education in public universities by moving the cost onto the shoulders of the student. The banks, on the other hand, make a tidy profit on years of interest, late fees and penalties on the increasing larger loans that are made to students to cover increasing tuition, books, housing and transportation costs. The most attractive aspect for bankers is that loans are federally guaranteed so there are no bankruptcy protections and no statute of limitations.
It’s a win-win for the banks and government: dominance, administration and exploitation.
In Holland, tuition at a public university is half the cost as in the US. Not only is tuition less expensive, but students are offered affordable quality housing for about $250 a month. In addition, student’s transportation costs are subsidized by the government. Obviously, the less things cost, the better the student is prepared to pay for university.
In addition to this, all students have the right to a one-time study grant between the ages of 18 and 30. Next, depending on income, you have the right to a need based grant. Finally, only after these options, is there recourse to a small study loan with a capped 4 percent interest rate.
San Francisco, CA
Feb 24 2009 - 3:28pm