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No Student Loan Bailout!

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A stu­dent loan bailout is a dread­ful idea – one that would cost tax­pay­ers bil­lions of dollars.

An esti­mated 5.3 mil­lion peo­ple are enrolled in repay­ment plans, with about $353 bil­lion in out­stand­ing stu­dent loans, accord­ing to the Gen­eral Account­ing Office. The GAO esti­mates that $215 bil­lion, or only 61 per­cent of the debt, will be paid in full. Another $108 bil­lion will be for­given alto­gether, with the remain­ing $29 bil­lion dis­charged because of death or disability.

Unfor­tu­nately, Don­ald Trump said he would make it even eas­ier for stu­dents to let their pay­ments slide. See https://​www​.wash​ing​ton​post​.com/​n​e​w​s​/​g​r​a​d​e​-​p​o​i​n​t​/​w​p​/​2016​/​10​/​13​/​t​r​u​m​p​-​j​u​s​t​-​l​a​i​d​-​o​u​t​-​a​-​p​r​e​t​t​y​-​r​a​d​i​c​a​l​-​s​t​u​d​e​n​t​-​d​e​b​t​-​plan/

As a col­lege pro­fes­sor for more than 20 years, I under­stand that stu­dent debt is a seri­ous issue. But it doesn’t make sense to let bor­row­ers off the hook. Stu­dents and their par­ents signed a con­tract for a loan to get money. If they bor­rowed money to buy a car or a house, they would have to repay the loan.

As Bloomberg colum­nist Noah Smith put it: “Stu­dents who take out loans don’t tend to fol­low the strict ratio­nal decision-​making process that econ­o­mists often blithely assume. In other words, they fail to cal­cu­late care­fully whether it’s worth it to take out the loans, and they don’t have a good idea of what it will take to pay off the debt. Stu­dents who take out loans don’t tend to fol­low the strict ratio­nal decision-​making process that econ­o­mists often blithely assume. In other words, they fail to cal­cu­late care­fully whether it’s worth it to take out the loans, and they don’t have a good idea of what it will take to pay off the debt.…That mis­take is increas­ingly being encour­aged, aided and abet­ted by the U.S. government.”

Indi­vid­u­als have an option if they can­not pay their loans: bank­ruptcy. That’s a dif­fi­cult les­son, but it may get peo­ple to think twice about meet­ing their com­mit­ments in the future.

It is also impor­tant to look at the under­ly­ing causes of stu­dent debt, such as the gov­ern­ment reg­u­la­tions that cre­ate bloated admin­is­tra­tive staffs. Since I started in higher edu­ca­tion in 1994, I have seen the expan­sion of admin­is­tra­tive per­son­nel to meet, in part, state and fed­eral guide­lines. For exam­ple, there were three admin­is­tra­tive jobs at the first school I worked at. The sec­ond one had seven. My cur­rent school has more than 30 admin­is­tra­tive staff mem­bers, includ­ing a dean, a senior asso­ciate dean, an asso­ciate dean, four assis­tant deans, a senior vice dean, a com­pli­ance offi­cer and myr­iad other posi­tions. Through­out the uni­ver­sity, I have seen the addi­tion of hun­dreds of peo­ple to fill admin­is­tra­tive posts. It seems as though every­one has an assis­tant who also has an assistant.

Trump and his new sec­re­tary of edu­ca­tion. Betsy DeVos, need to tighten the require­ments to get loans and cut the fed­eral reg­u­la­tions that result in col­leges and uni­ver­si­ties expand­ing their admin­is­tra­tive staff. Both of these actions would go a long way to reduc­ing the cost of higher edu­ca­tion and make stu­dents respon­si­ble for their finan­cial decisions.


Christo­pher Harper worked as a jour­nal­ist for more than 20 years. He teaches media law.

screen-shot-2016-12-02-at-6-22-56-am

A student loan bailout is a dreadful idea–one that would cost taxpayers billions of dollars.

An estimated 5.3 million people are enrolled in repayment plans, with about $353 billion in outstanding student loans, according to the General Accounting Office. The GAO estimates that $215 billion, or only 61 percent of the debt, will be paid in full. Another $108 billion will be forgiven altogether, with the remaining $29 billion discharged because of death or disability.

Unfortunately, Donald Trump said he would make it even easier for students to let their payments slide. See https://www.washingtonpost.com/news/grade-point/wp/2016/10/13/trump-just-laid-out-a-pretty-radical-student-debt-plan/

As a college professor for more than 20 years, I understand that student debt is a serious issue. But it doesn’t make sense to let borrowers off the hook. Students and their parents signed a contract for a loan to get money. If they borrowed money to buy a car or a house, they would have to repay the loan.

As Bloomberg columnist Noah Smith put it: “Students who take out loans don’t tend to follow the strict rational decision-making process that economists often blithely assume. In other words, they fail to calculate carefully whether it’s worth it to take out the loans, and they don’t have a good idea of what it will take to pay off the debt. Students who take out loans don’t tend to follow the strict rational decision-making process that economists often blithely assume. In other words, they fail to calculate carefully whether it’s worth it to take out the loans, and they don’t have a good idea of what it will take to pay off the debt….That mistake is increasingly being encouraged, aided and abetted by the U.S. government.”

Individuals have an option if they cannot pay their loans: bankruptcy. That’s a difficult lesson, but it may get people to think twice about meeting their commitments in the future.

It is also important to look at the underlying causes of student debt, such as the government regulations that create bloated administrative staffs.  Since I started in higher education in 1994, I have seen the expansion of administrative personnel to meet, in part, state and federal guidelines. For example, there were three administrative jobs at the first school I worked at. The second one had seven. My current school has more than 30 administrative staff members, including a dean, a senior associate dean, an associate dean, four assistant deans, a senior vice dean, a compliance officer and myriad other positions. Throughout the university, I have seen the addition of hundreds of people to fill administrative posts. It seems as though everyone has an assistant who also has an assistant.

Trump and his new secretary of education. Betsy DeVos, need to tighten the requirements to get loans and cut the federal regulations that result in colleges and universities expanding their administrative staff. Both of these actions would go a long way to reducing the cost of higher education and make students responsible for their financial decisions.


Christopher Harper worked as a journalist for more than 20 years. He teaches media law.