Government run student loan programs?
What could wrong?
The student loan crisis is perfectly government
A casebook study of the law of unintended consequences.
According to Josh Mitchell, while in the Wall Street Journal:
The governing administration is preparing to forgive billions of dollars in college loans to doctors and other white-collar Americans with expensive educations, beneath a law designed to help modestly paid workers in public service.
How did this boondoggle develop?
Well, it comes down to good intentions, as a great number of government programs do.
Let’s persuade folks to get into non-profit, otherwise unattractive, at least financially, positions, by, forgiving a few of their student loan debt.
By way of extra compensation, so these worthy non-profits will have enough workers.
As this content puts it:
At issue is a 2007 program that forgives any federal student debt from borrower has made a decade of payments, which have been pegged to a low number of salary, while working for government or nonprofit entities. It had become designed to encourage young Americans to pursue traditionally hard-to-fill jobs: public defenders, social workers, teachers and modestly paid doctors in underserved areas.
That’s the plan.
What actually happens?
The biggest beneficiaries shall be medical-school students, who owe mostly $180,000 upon graduation and are increasingly working for nonprofit hospitals and gaining eligibility for that program. Financial advisers estimate a large number of will have 80% or more of their original balances forgiven under what some are calling a \”doctors\’ loophole\” inside the program.
Who could have foreseen this?
The whole mess started in the 1960s, with every American suddenly becoming entitled to a college education.
See, the government established people with degrees made extra money, bought more houses, and, were happier, as opposed to those with only diplomas.
So they started subsidizing college costs.
And, when you subsidize something, you get more of it.
So, colleges raked during the money, raised tuition, without skin in the game.? They got their whether the student loans were repaid or not.
If you are a doctor, or someone with big student loan debts, who can work for a non-profit for years, by all means, do so.
It is not your fault if the program was not designed with you at heart.