Student loans have become a hot political issue. That is too bad because the true solution to the issue will be delayed. There are a few simple principles in play here.
Here is a great “rant’ by Dave Ramsey the creator of Financial Peace University on this issue. He nails it. http://www.daveramsey.com/radio/home/loadclip/studentloans-20120426?ictid=text
- First Issue: Supply and Demand. With the massive government subsidization of higher education, it is no wonder that college tuition is out of control. This subsidy has created an increasing demand curve against a relatively fixed supply so of course the cost of tuition has outstripped inflation for many years.
- Second Issue: Return on Investment. The conventional “wisdom” that “everyone should be able to get a college degree” has left us with millions of new graduates with thousands in debt because their schools misled them into thinking that getting a job with a unique degree would be an easy path to success.
- Third Issue: Caveat Emptor. Parents are not teaching their children fiscal responsibility! Their children are targeted by predatory financial institutions for credit cards and assume debts for material things before starting a career. Without a strong sense of reality and good math skills, these children become indentured servants to these institutions for their entire life. Sadly, most parents are incapable of teaching their children about fiscal responsibility as too many families are living paycheck to paycheck and have little or no net worth.
Here is a great “rant’ by Dave Ramsey the creator of Financial Peace University on this issue. He nails it. http://www.daveramsey.com/radio/home/loadclip/studentloans-20120426?ictid=text