Shocker: Inflated Student Loan Market About To Go The Same Way The Inflated Housing Loan Market Did - Wall Street : Companies In Student Loan Business

Shocker: Inflated Student Loan Market About To Go The Same Way The Inflated Housing Loan Market Did

Disclaimer: This article is a blog post and does not represent the views or opinions of Reiten Television, KXNet.com, its staff and associates and is wholly owned by the user who posted this content.

Feb 5 2009 12:00AM
http://sayanythingblog.com/index.php
I’m shocked that “easy money” loans given out indiscriminately to pretty much anyone who wanted them would now be in jeopardy from inflated tuition prices and borrowers who can’t pay the money back.

Misguided easy-money policies that are encouraging the masses to go into debt; a self-serving establishment trading in half-truths that exaggerate the value of its product; plus a Wall Street money machine dabbling in outright fraud as it foists unaffordable debt on the most vulnerable marks.

College graduates will earn $1 million more than those with only a high school diploma, brags Mercy College radio ads running in the New York area. The $1 million shibboleth is a favorite of college barkers.

Like many good cons, this one contains a kernel of truth. Census figures show that college grads earn an average of $57,500 a year, which is 82% more than the $31,600 high school alumni make. Multiply the $25,900 difference by the 40 years the average person works and, sure enough, it comes to a tad over $1 million.

But anybody who has gotten a passing grade in statistics knows what's wrong with this line of argument. A correlation between B.A.s and incomes is not proof of cause and effect.

Offsetting that million-dollar income discrepancy is the $46,700 four-year cost of tuition, fees, books, room and board at a public school and $99,900 at a private one even after financial aid, scholarships and grants. Add all this to the equation and college grads don't pull even with high school grads in lifetime income until age 33 on average, the College Board says. Even that doesn't include the $125,000 in pay students forgo over four years.

Well imagine that. Government-subsidized consumption inflates prices, which in turn prompts more subsidies, which in turn inflates prices even more until the entire industry collapses in a mess of unpaid loans and taxpayer bailouts.

Sounds…just like the housing market.

At some point we’ve got to realize that subsidizing things like higher education and home ownership doesn’t do anyone any good. Home ownership is a trait of upstanding citizens because upstanding citizens tend to be prosperous to own a home. People with a college education tend to be more prosperous because hard-working, intelligent people tend to go to college.

You can’t heard the public into universities, and into home ownership, and expect that having a degree and/or a mortgage will make them better people.