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View Diary: Rep. Virginia Foxx has 'little tolerance' for student loans (270 comments)

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  •  Very well said... Foxx is an idiot, but as much.. (2+ / 0-)
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    Caj, AmyU

    ... as I hate to say it, there is something we can strip out her argument and probably agree with.   Foxx is simply too daft to understand the mechanics at work, and is falling back on the nostalgia trap where everyone back in the "good old days" did things the right way, just like she did.  

    One simple fact is that education prices are in the middle of a bubble, just like the mortgage bubble.  One reason the price of housing rose at rates exponentially higher than inflation was the fact the banks were handing out money like a drunken sailor in a whorehouse.   It was of no consequence to them, thanks to CDOs and CDSs.  "Need $500,000 for a 900 square foot vacation property, even though you make only $50K a year?  No problem, since if you can't pay it back it's no skin off my nose!"   As long as people could borrow so much so freely, sellers could increase prices as much as they wanted, and a strange thing happened:  people actually bought!  Nobody ever stopped to ask why a 900 soft bungalow was half a million dollars, as long as they could get the loan, they paid it.  

    Education is in a similar boat.  Costs are increasing faster than the rate of inflation.  Not only are we talking tuition here, but dorm rooms, meal plans, and even books have shot up in price without any concurrent increase in quality.   This is essentially fueled by student loans.  A student loan is the only place an 18 year old without a job or job history can borrow $100,000 with a guaranteed payback by the government if the student defaults.  When you couple that fact with the idea that "High cost equals high quality," you can see why education costs are rising to the point the market will bear -- a market that is flush with tons of money that is easy to come by and that every single tax payer is on the hook for.    

    We need the student loan program.  I'd rather go to system like Finland and some other European countries where college is free for anyone who meets the standards to get and stay in.  Not only does this level the playing field granting everyone who earns the opportunity equal access, but since the government is writing the checks, schools simply cannot justify tuition increases simply because "you're able to pay it."  But for now, lets be realistic since this country simply does not have the political will to do that.  But what we do have is the will to learn from not-so-distant mistakes in our past.  At some point in time, someone needs to  ask the simple question "why is Such-and-Such University worth that much per year, and why should we pay it?"  

    During the height of the real estate boom, if consumers had actually asked "what makes this house worth as much money as you're asking, and how is it possible that it is increasing in value every year at multiples of wage growth?" perhaps they would have made better decisions, and simply not paid the asking price just because a loan was easy to get.

    Again, Foxx's answer here is hopelessly anachronous, and is in no way related to the realities of the situation.  She is attributing this problem to individuals who are a victim of a system she clearly does not understand, and quite frankly does not want to understand since these policies are a manifestation of the policies she espouses.  However, that does not mean she's not asking a valid question.  

     

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