The interest rates being charged current and former students
on these privately-held education loans is very high, especially the ones which
are not guaranteed by the US Government.
So, the US colleges, US financial institutions, and even the US Government
have put all of this pressure on young people to go to college.
But yet US colleges continually have raised their tuition
enormously.
And US financial institutions
have charged very high interest rates on student loans, many of which are substantially
higher than the currently prevailing interest rates.
And the young person and her family buy into all of this
pressure.
But the end result is that in
the most recent five years or so, with the horrible US
economic environment for employment, the overwhelming majority of students
graduating from college do not find a full-time job at a livable wage in their
field of study.
But yet these students have huge amounts of education loans,
for education which didn’t yield them a full-time job in their field of study.
This isn’t right…..not even close to being right.
As one step to correct this, I recommend that the US
Government buy, at fair market value, all education loans now held by private financial
institutions.
And after acquiring all of these privately-held education
loans, the US Government reduces the interest rates on these education loans to
a reasonable one, which is consistent with the interest rates it charges on its
own US Government education loans.
Thus, the incredible financial pressure that has been placed
on so many college graduates of the past five years, and even the past ten
years, will be significantly and fairly reduced.
OK, so this fair proposal has to cost the US Government tons
of money? And it certainly can’t be something
that helps solve the US Fiscal Cliff?
Well, actually just the opposite.
So, the way CBO scoring goes, which is what is being used as
the measuring stick for US Debt reductions over the next ten years, and thus
also being used as the measuring stick in the current US Fiscal Cliff negotiations, when the US Government
buys these education loans held by financial institutions, the interest income
it receives from them reduces US Debt, but yet there is no interest expense payment increasing
the US Debt.
Thus, with the above recommendation, the US Debt will be
reduced substantially over the next ten years.
College graduates, former college students not graduating, and present
students…..all with education loans…..have to all be elated with the financial effects
on them of this proposal.
Further, there is huge US
economic stimulus in this proposal, since these former students with education
loans, who are for the most part not well-heeled financially, will now have more money
in their pockets to spend in the consumer-driven US
economy.
Also, this proposal will help resolve the US
fiscal cliff, because it results in a substantial US Debt reduction over the
next ten years, as measured by CBO scoring.
It’s a winner for nearly everyone.
