Sunday, January 01, 2006

The Subsidy that Refused to Die

A Washington Post article breaks down the history of the loophole that has had the government guaranteeing lenders a 9.5% interest rate on certain loans--with market rates as low as 4 percent over the past decade, the supplement that the government pays lenders to make up the difference has amounted to a huge subsidy.

1 comment:

Anonymous said...

Thank you for your comments on the article regarding the subsidy loophole in certain loans. Your articles have been quite informative now that I have a son preparing for college next year. It's not the problem of him going to school, but more the entitlement he believes he has of being in college. I've talked to him about what it is in life he wants to do; but he can only give me a generic degree program. It can be aggravating listening to such demanding "I want, I need" mentality.
The government is not in the business of finacing the education for every individual who desires to attend college. Starting back in the mid-60's in CA, when students protesting rise in education cost, big business has been the education process. Beginning in the late 50's and early 60's, after the wars, education became a "for-profit" business. And in such, those who apply for and take student loans are charged a fee/interest for borrowing the money. It often comes across that women should be held to lesser degree of responsibility or debt ratio. I will assume this not the case, but here is equality at it's finest. The argument about women making less money has merit and truth, but not because of some gender bias by men. Many financial and hiring requirements are made by the very talented, smart, educated women, not there CEO's or COO's. And to imply that these hiring women should offer women more pay because financial debt or "sisterhood", is foolish. It also becomes very sexist, the very argument women made in the 60's to gain the right to gainful employment.

This topic of debt is such a small distraction in what is really taking place in our educational system in America. I am glad you are addressing it; but know that there is more than what you are experiencing and discussing here. Have you every done a comparative study as to the cost of a four-year education in the previous four or five decades? What about a "qualitative" study on what is being delivered today against the knowledge sought and taught previously?

I worked in and support of the government during my career. In the government processes, it takes 7-10 years before decisions are really felt. So as you speak with spite and disdain for President Bush, any decision he makes to oppose or support lower cost for student-aid loans, is based on decisions made by President Clinton. So the original subsidy process started under Bill Clinton, not the current administration. And honestly, whether the war is valid or not, this administration was busy dealing with slightly more important situations.

I agree with you most of the time, but rarely do I hear a solution set. What would be your solution? Do you not think that global democracy cost money? How do you think we've spent these dollars? For the past 10-12 years, international students came to america for education in democracy to return home (abroad) to implement democratic policies and revolutions. Most of this started in the latter-half of B. Clinton's first administration. Research the numbers to see if it is true, that foreign student-aid rose during this period. There's a finite amount of money available, so when there is a greater demanded for its use, debt/borrowing will in increase. Quite honestly, eduacating the masses has and will never increase knowledgeable, intellectual, and innovative professionals. My point is demonstrated by our (US corporatation) demanding to outsource technical development, engineering, bioresearch, medical, and professional services. Educating everyone, or masses actually decreases the overall effectiveness of the education system. You simply do not get the brightest, natural leaders; but you give individuals a false hope and belief in a piece of paper. Very fewer students are leaving school with less knowledge and understanding. Thinking about this for a minute: Many professors - students of 60's, babyboomers will be retiring soon. Who will become the future professors? What knowledge and/or understanding will they deliver to future students?

I could go for hours, so I will stop here. There is more to this issue than what we are getting in your informative articles, I ask that you search a bit deeper for the "truth". Maybe your upcoming book will have a great deal of this information, so I will see what happens with the book.

Keep up the good work; I'm looking forward to purchase your book.