There is life beyond college with less debt (96 hits)
Thursday, May 3, 2012
President Obama recently spoke about making a college education affordable, but the program he is proposing for cost containment sometimes misses the mark.
The president's lead into discussing college costs was his call on Congress for legislation that will stop a July 1 interest-rate increase on subsidized Stafford Student Loans, from 3.4% to 6.8%.
While laudable for those with loans, putting great emphasis on interest rates is like a ship's captain who mistakenly thinks most of the iceberg in the ocean ahead can be seen above the surface.
There is an ugly secret to college loans that hides below the watermark. If these were any other kind of loans, credit agencies wouldn't go near them, unless told to, as U.S. Rep. Barney Frank did to Freddie Mae and Freddie Mac.
As with liar's loans, students are allowed to take on debt with no promise they will be able to pay them back, even in a good economy.
But the current economy is not good, and the statistics show it. Of recent college graduates, more than 50 percent are unemployed and underemployed.
In an attempt to alleviate the problem of high debt, Congress and the president earlier approved legislation that allows these indebted students to cap their payments as a percentage of income or to temporarily make no payments. While laudable, this is a patch applied with faulty glue.