Fixing Student Loans: Let’s Give Colleges Some ‘Skin in the Game’

Fixing Student Loans: Let’s Give Colleges Some ‘Skin in the Game’

By Alex J. Pollock  

What lessons on student loans can be learned from the searing national misadventure with mortgages?

There are provocative parallels between student loans and the mortgages that created the disastrous housing bubble. In both cases, the government promoted plausible goals— higher education and home ownership—to excess, through the overexpansion of debt to levels beyond the repayment ability of a large percentage of borrowers. In both cases, the government guaranteed much of the credit, putting the ultimate risk of bad debts on taxpayers. In both cases, debt expansion drove the price of the object being financed (colleges and houses) to heights sustainable only if debt could always be increasing. In mortgages, it could not, and the subsequent collapse raises the question: will there be a similar outcome with student loans?
Professor Richard Vedder, considering the question of a student loan bubble, recently concluded that the worst idea ever “was the creation of federally subsidized student loans in the first place.” Can any lessons from the searing national misadventure with mortgages be usefully applied to student loans? I believe so.

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Why Growth Matters More than Debt

By Steve Conover  

The proper question is not how will America pay foreigner creditors back but rather what will maintain China and Japan’s desire to buy low-interest Treasury securities from us?

The U.S. federal debt recently eclipsed $15 trillion, and is still climbing. That has generated headlines and raised a lot of questions. How should we behave towards China, supposedly our biggest creditor? Has the debt burden become unsustainable? How will our kids and grandkids ever pay off the debt we’ve been accumulating? The answers contain some surprises.

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The Problem with Bambi-nomics

By Robert McHenry

On Mitt Romney, Bain Capital, and modern political discourse.

Mitt Romney's difficulty with his history at Bain Capital may be our most nearly perfect example of how ignorance and misunderstanding, willful or otherwise, render our political discourse impotent.
Businesses that do what Bain does are sensitive about the common analogy comparing them to scavenger species in nature. In large part this is owing to how we are trained from childhood to think of nature in terms of postcard vistas, pettable furry things with large eyes, and the romantic notion of some sort of sweetly cooperative community of creatures. We tend not to teach children about vultures, fungi, slime molds, or maggots. More importantly, we do not teach them why such things are every bit as important to the ecology as Bambi. Without them, the world would soon be tree-deep in corpses, large and small, and life would become impossible. With them, the soil is constantly enriched with recycled nutrients, and life continues abundant. But this kind of comparison clearly doesn't help Bain's image very much.

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