Trillion Dollar Bubble

by Kerby Anderson, Point of View: A recent blog post by Arnold Ahlert reminds us that we are probably headed for another trillion dollar bubble. This one is due to the way the government has managed the student loan program.

Those of us who have sent our kids to college are well aware that college tuition has skyrocketed. The National Center for Public Policy and Higher Education has found that published college tuition and fees increased 439 percent from 1982 to 2007, while the median family income rose 147 percent. The major reason for that is student loans. And that proves the economic maxim: “If you subsidize something, you get more of it.”

Let me explain. Federal assistance to college students has risen 60 percent just in the last three years. More and more student loan money is available to students because the cap has also risen. Back in the 1980s, there was a $2500 annual cap. That means that the maximum amount of federal debt a student could borrow in getting a four-year degree was $10,000. That amount has more than tripled to $31,000.

Next comes the vicious cycle. As college tuition costs increase, the government makes more funding available to students. The more funding available makes it easier for colleges to raise their tuition since they never have to worry about student loan default.

But students do default on their loans. So who pays? You, the taxpayer, pay. The universities are insulated from default, but we get to pick up the tab.

It gets worse. Congress instituted a government takeover of the student loan program which was slated to begin July 2014. President Obama, however, issued an executive order to move the timetable up to this year. And if that is not bad enough, there is a bill in Congress right now which would actually forgive student debt. The argument is that the government bailed out “rich bankers” so why not “poor college students”?

We are headed for a major economic crisis, and it is clear that the government is the major reason it is about to hit. I’m Kerby Anderson, and that’s my point of view.
-----------
Kirby Anderson is an author, lecturer, visiting professor and radio host and contributor on nationally syndicated "Point of View" and the "Probe" radio programs.

---

Tags: Kerby Anderson, Point of View, United States, student loans, student loan program, trillion dollar bubble To share or post to your site, click on "Post Link". Please mention / link to the ARRA News Service. Thanks!