Sunday, November 13, 2011

The Student Loan Crisis and Proposals to Privatize

With the student loan debate heating up in government, many are asking how we should address the issue of the rising cost of education and the inability of students to pay them off once out of college.  Increasingly, comments posted online are reciting the mantra: "Privatize, privatize, privatize...The Feds need to get out of the education system entirely."

The current loan system is already highly privatized. The federal student loans for years were quickly sold to private companies who would own and service the debt. My law school loan payments went to a private company, not the federal government - they bought the loans from the feds. Obama is trying to reverse how much of this is going on, actually, because the hasty privatization of the student loan debt actually escalated the problem, making it too easy for the government to dish out loans that students couldn't easily repay.

Also, for the first half of our nation's history, most colleges were private and religious, and then the state universities gradually displaced many of them and became dominant. When people talk about "privatizing" higher education, do they recognize that most college students attend state-run universities? Do they really want to shut all those down? If we don't want to close down all the state schools, then we should think of the federal student loans as a subsidy from the federal government to the states. Without it, the states could not afford to run the universities and most of them would close.

Those who want the private sector to start and operate colleges should recognize that almost all of them will be religious/sectarian schools. The secular private colleges of today were nearly all started as sectarian schools to train ministers; many went secular partly to compete with the state-run universities. Among new colleges that start today, the trend is the same - the vast majority are religious-sectarian. Why? Because education is not a very profitable business, and requires heavy subsidization from somewhere.  The experimental for-profit universities we see cropping up today are simply exploiting the taxpayer-funded student loans; they would collapse if the government stopped dishing out tuition money. The private sector does not start and maintain good colleges except where there is a sectarian group pouring money into it. Bottom line: higher education is going to be funded either by taxpayer dollars or by church tithes. If you want to return to being a country where every college is part of a church denomination, that's what privatization means in this area.


  1. It's very sad to think that many people who have applied and obtained student loans are still paying them up to this moment. These loans are supposedly helping students who can't afford their tuition fees during college life but it seems that these loans are becoming a burden to many borrowers. The government is doing something about this one but it seems like it does not working the way it should be.

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  2. While student loans greatly help parents and students to get by the bills in college, it may turn out to be a bad option in the long run. Not all students meet their desired goal after graduation. With this, they have to consult a loan modification lawyer.

  3. That's why experts don't really promote getting student loans to finance your education. Either way, talking to a student expert can help lessen the burden. los angeles probate advance