On the 24th of August, 2022 United States
President Joe Biden put forward a plan to provide a 10,000 USD relief for
student loan dept; an additional 10,000 USD is available for some if conditions
apply. Buying votes has long been a part of politics and so this move is not a
novelty, unfortunately this is a case of where the cure is more awful then the disease
and will most likely backfire as a political move simply due to the maths.
In the United
States
Here are some of the people not eligible for any form of
relief under this bill; people who have already paid off their student loan,
people who took out a private loan to attend school, people who took out a loan
to buy a truck so they could get to and from work as they learned a trade. This
bill will demand that the people listed above will be paying off the debts of
those people benefiting from the bill. While not a pretty metaphor, this bill
is a band-aid placed on the previous band-aid, which was put on an earlier now
festering band-aid, that was placed an itch that over scratched.
Looking back…
If the higher education systems around the West
are not righted the education system and by extension the countries these
institutions are in, will collapse. While human history goes back thousands of
years there are certain moments which can be noted as a ‘fixed point in time’
for certain events. To see how we got here we certainly don’t have to go all
the way back to the university of al-Qarawiyyin, which was established in 859
AD in Morocco or to The University of Bologna which was established in 1088 and
so the starting point for this article will begin circa 1966, the year of birth of
this author.
While the act of providing student loans and grants was
already in place in the
The university administrators didn’t instantly embrace the
new system though within five years it became obvious that many of the
institutions were onboard and this was made evident by the significant rise in
tuition fees. The Federal Government’s intervention in the student loan process
shifted the focus of the educational institution administrators away from a ‘capitalist
system’ to a ‘system based on capital’.
Annual Cost of College Tuition & Fees
|
Year
|
Public 4-Year
|
Private 4-Year
|
Priv. 4-Year Adjusted
|
Inflation Rate
|
|
2019-20 |
$9,349 |
$32,769 |
$32,769
|
1.23%
|
|
2009-10 |
$6,717 |
$22,269 |
$26,430
|
1.64%
|
|
1999-2000 |
$3,349 |
$14,616 |
$22,208
|
3.36%
|
|
1989-90 |
$1,780 |
$8,396 |
$17,010
|
5.40%
|
|
1979-80 |
$738 |
$3,225 |
$10,686
|
13.55%
|
|
1969-70 |
$358 |
$1,562 |
$10,636
|
5.72%
|
Within the course of the fifty years from 1970 to 2020 the annual
cost of collage tuition rose 26.11 times for public institutions and 20.97
times for private institutions both figures are based on the unadjusted rate. The
increase in cost for attending a private institution, under the adjusted rate,
is 3.09 times or 208% in just fifty years.
NOTE: During the same fifty year span, a push was on to
ensure that many jobs which were previously ‘walk in jobs’ would now require a
collage degree. This practice regardless if it was coordinated with the
schools or not has turned many of the high-school only graduates into wage slaves. This stifled general economic growth and upward
economic mobility for those individuals; the days of working one’s way up from
the bottom has died.
You can’t turn back
the clock
The student loan system arrived at its current state a
little bit at a time; a tweak here and a tweak there coupled with the reaction
of those involved. Therefore, a return to a sensible educational environment will
have to be done in the same way.
A high level plan to providing a sustainable higher
education system is outlined below:
1) Independent third party audit and actuary analysis of the
higher-education pipeline.
A University/Collage degree, for
the purpose of employment, must be considered an investment and every money
lender needs to keep this in mind. The audit would perform a review of each discipline
and sub-discipline providing real numbers on job placement and salary
expectations.
2) Shift the social narrative
away from the idea that the word ‘job’ is a dirty word.
Identify fields of work that do not
‘need’ a collage degree in order for the worker to be successful. Many of the
people with a University/Collage often complain that it is takes them days to
get a trades person for a repair or renovation and that the prices are unreasonable;
perhaps a course on how supply and demand sets prices should be included as
part of ‘Lesbian Interpretative Dance’ degree.
3) Reduce the minimum wage.
The minimum wage is a poorly planed
exercise in futility. The prices of everyday run of the mill goods and services
are based on the costs incurred to provide said good or service and typically
the greatest portion of that cost is payroll. The reader should imagine the
amount of consideration that goes into the price of a Big Mac sandwich, does the reader truly believe
that the MacDonald’s Corporation does calculate each ingredient down to at
least two decimal points from which each of their sandwiches.
When the cost of payroll goes up,
so goes the price of the Big Mac; these are truths, these are facts. Sticking
with the sandwich example, MacDonald’s will have to balance between market appeal
coupled with a little bit of profit for the investors and stakeholders. Deviating
from this ever vigilant position will risk the survivability of the
organization.
4) Place limits on foreign student attendance.
Foreign student attendance is an
easy way for schools to bring in cost covering cash as these students typically
get charged extra and are not eligible for loans backed by the US
The reasoning behind this thinking
is easily explained. While Universities and Collages purport to be the
spreaders of knowledge and best practices the question comes down to who are
the beneficiaries of this spread; the reader must recall that the named purpose
of government is to benefit the citizenry that have given them the privilege to
lead. By allowing 5% of the foreign students to be of any origin those students
support the school both financially and are in line with the schools purpose.
By using part of the international aid package(s) for the other 5% the schools
will benefit source countries, which will have the opportunity to help themselves
through the application of good STEM practices. This policy would limit aid
based students to STEM related fields.
5) Place limits on interest rates.
This policy point is a reflection
of policy number one at the top of this list. These schools must once again be
put on the hook for their product. Recalling that education is an intangible asset
the rate and the risk of investment must be weighed by all parties and as such
these people need to conduct themselves accordingly. Interest rates and
insurance premiums have long been the measuring sticks for risk, which was
abandoned starting in the 1980s in favour of governmental assurances.
By limiting bonded interest rates the
schools would have to pick and choose which loans will be accepted into their schools
and when the school wants to accept the risk for un-bonded students, that
choice will be on the purse of the school.
6) Repeal bankruptcy denial.
Currently it is nearly impossible
to escape student loan debt and any accrued interest charges tied to it. This
created a dogged pursuit for money by the schools backed up by the power and
weight of the government thus creating the perfect storm for a money grab.
By allowing graduates to once again
seek bankruptcy the schools would be forced to rethink the admission process
and once again align course offerings and costs with expected earnings.
Safety First:
Somewhere within the 1960s and 70s is when this author
believes the term ‘Safety First’ was brought into the public domain. Safety was
outside of the human experience from the beginning of mankind, though death by
starvation or exposure has been ever present.
Once the Western World adopted ‘Safety First’ in the
workplace that catchphrase spread to the general population and polluted the
minds of the many. The greatest advancements achievements made by mankind
didn’t come under the rubric of ‘safety’. The most obvious example of this is
international competition, be it in a war or a space race.
This author would like to put forth the ideal that money should
be placed ahead of safety and safety be returned to being an individual effort.
Much like affirmative action or other hiring quotas this action by President
Biden will create a cohort of people who will have any and all faith in them stripped
away.
Sources:
No comments:
Post a Comment