Patterico's Pontifications

3/30/2010

Reinventing Student Loans

Filed under: Government,Obama — DRJ @ 7:34 pm

[Guest post by DRJ]

A side effect of the passage of health care is the Obama Administration’s reinvention of student loans into a government program. Here’s how it will work:

“Starting July 1st, when the government issues student loans, it will bypass the banks who have traditionally provided them, and directly target borrowers.

A White House press release spells it out this way, “[A]ll new federal student loans will be direct loans, delivered and collected by private companies under performance-based contracts with the Department of Education. According to the non-partisan Congressional Budget Office, ending these wasteful subsidies will free up nearly $68 billion for college affordability and deficit reduction over the next 11 years.”

But some in the President’s own party say eliminating the middle man also equals eliminating jobs.

But the President’s focus today will be more about what the bill does than what it does not.

He will also talk about the provision’s less controversial expansion of Pell Grants, as well as supporting historically black and minority institutions and caps on student loan repayments.

According to the White House, “New borrowers who assume loans after July 1, 2014, will be able to cap their student loan repayments at 10 percent of their discretionary income and, if they keep up with their payments over time, will have the balance forgiven after 20 years.”

I won’t bother complaining about how Obama is inserting the government into every area of American lives and working to shrink capitalism. But I’m curious how those loan cap recipients will react when they figure out they will have to give the government detailed proof of their annual income and expenses for 20 years, or until they pay off their student loans?

Maybe they will be so grateful for the loan forgiveness that they won’t care but most people wouldn’t like having to provide the government with a list of all their expenses and letting a bureaucrat pore over them to decide which expenses are necessary and which are discretionary … for 20 years.

— DRJ

UPDATE: More on repayment caps below.

MORE ON REPAYMENT CAPS — In fairness, the 10% repayment cap provision may not be that big a change since current law already sets a 15% repayment cap for some government student loans:

The Income-Based Repayment (IBR) plan was enacted as part of the College Cost Reduction and Access Act of 2007 and became available on July 1, 2009. It is best for borrowers who are experiencing financial difficulty, have low income compared with their debt, or who are pursuing a career in public service.

Income-based repayment is intended as an alternative to income sensitive repayment (ISR) and income contingent repayment (ICR). (Both ISR and ICR plans will continue to exist.) It is designed to make repaying education loans easier for students who intend to pursue jobs with lower salaries, such as careers in public service. It does this by capping the monthly payments at a percentage of the borrower’s discretionary income, which is based on the borrower’s income and family size, not the total amount borrowed. The monthly payment amount is adjusted annually, based on changes in annual income and family size.”

Thus, under current law, the government analyzes income and family size to determine repayment caps. But, like health care reform, the concern is not only existing law but what regulations will accompany it. Assuming this law provides the government will calculate discretionary income the same as in the past, that doesn’t prevent it from changing applicable laws and regulations in the future.

69 Responses to “Reinventing Student Loans”

  1. Eventually we will see “Administration Approved” curriculum that must be adhered to if a college wants to receive the benefit of “government funded students”….. Intrusive, I thinking Yes!

    SteveCan (72a7f6)

  2. “delivered and collected by private companies under performance-based contracts”

    I would like to take a gander at the performance incentives for collections. Those typically are not very people friendly.

    Also, why does Obama keep structuring these programs with start dates out in 2014 rather than closer to today. On the slim chance he is reelected, it won’t give people the chance to see if they are working until well withing his second term. Seems to be a chickensh*t approach.

    When is his focus going to switch to jobs, jobs, jobs?

    daleyrocks (718861)

  3. daleyrocks:

    When is his focus going to switch to jobs, jobs, jobs?

    When he’s finished making sure most new jobs are government jobs.

    DRJ (daa62a)

  4. that’s basically a transfer payment to his douche friends in academia I think… and it’s inflationary as all get out… universities will have no incentive at all to craft affordable programs…

    this will end badly.

    happyfeet (71f6cb)

  5. “When he’s finished making sure most new jobs are government jobs.”

    DRJ – Those are some high paying jobs these days according to the latest stats. I’m glad he’s being so generous with my money.

    daleyrocks (718861)

  6. I’m waiting for him to try to close Hillsdale College, the one school in the nation that refuses all fed help, including fed loans for students.

    MD in Philly (59a3ad)

  7. The healthcare “reform” reconciliation package uses funds from the student loan program to “pay for” the healthcare.

    SPQR (26be8b)

  8. He wants to get as many people into college as he can. It is the place where the most liberal, brain washing goes on, except for the media that is.

    Alta Bob (e8af2b)

  9. “He wants to get as many people into college as he can.”

    Making it as cheap as possible and claiming credit for it is also a great Democrat vote getter even if it costs the government a ton of money and cranks out stupid students unqualified to face the world.

    daleyrocks (718861)

  10. they won’t need to submit finances for review: that’s what the ration cards are going to be for.

    your discretionary income will be predetermined, just like your health care options.

    redc1c4 (fb8750)

  11. I updated the post regarding how current law determines repayment caps.

    DRJ (daa62a)

  12. I guess since a high school education is really not worth anything, now you have to have a BA or BS to be basically educated.

    But really, what’s the point of getting maximum people into college? It empowers schools, which are a huge industry, and it makes people hope for vast success, which I’m cool with of course.

    But the people our country actually NEED in school are likely to figure out a way to get there on their own… since they are smart.

    Obama would do our nation more good with a program for teaching trade skills to everyone. Even the college bound philosopher can learn how to change an engine, or weld, or fix plumbing. I wish this were part of getting a diploma.

    What good is it to have millions of liberal arts grads who simply aren’t contributing anything to their field? If we were making liberal arts degrees twice as expensive, and making engineering and science degrees free for citizens, the country would be much better off.

    dustin (b54cdc)

  13. There are a couple of problems currently, dustin. The first is as you mention that a high school diploma is currently so damn worthless, that a lot of employers use a college degree as a recruiting screening without it actually being a real requirement for the subject job. The second is that today’s college student thinks he/she is entitled to a lifestyle of a well-off adult – and they’ve been sold that its OK to borrow money to have that. The third is that colleges today are literally stealing from their students by providing an often worthless “degree” in worthless subjects at an outrageous price.

    The way that the current law of bankruptcy is set up, students who mistakenly take on too much debt for a degree, or take on debt and fail to achieve a degree, are enslaved for life. You can’t discharge government-guarantee loans in bankruptcy and to get a hardship forgiveness from the Dept of Education you basically have to prove a complete and permanent disability.

    It is an outrage frankly.

    SPQR (26be8b)

  14. I just did some quick math on my student loan debt. I graduated in 1992 and in my first job I sent in 13.5% of my gross income (pre-tax and deduction) each month to repay my loans. These were the days too before you could deduct loan interest from your income taxes (that law went into effect in something like 1997, but only applied to people who had begun repaying loans after 1994). Yes, I lived in a lousy flophouse for a year and ate nothing but nachos and baked potatoes; in other words, I lived like a typical 20-something. Somehow I managed, mostly because it inspired me to work harder and make more money. I have real trouble believing that today’s loan debt is so onerous that this generation of college graduates can’t handle it. Sure, they may not be able to immediately buy an iPad when it comes out or upgrade to the latest iPhone, but like I did 20 years ago they can lean to adapt and make more money.

    But in the Age of Obama, such quaint notions as personal responsibility and self-sacrifice are relics of a bygone era.

    JVW (fd30ab)

  15. Apropos of nothing:

    My son is a senior in high school. He’s a good student and was actually recruited fairly heavily by some colleges. Anyway, we went through the usual campus visits at his college of choice. This was back in January.

    But, here’s the deal: The admissions dean said that they would no longer be accepting college loans from private sources because of the pending legislation that would require all loans to be federal.

    I remember thinking that this was odd, since the college seemed to be betting that the legislation would pass. I mean, I knew this move was in the works, but it wasn’t a done deal at the time.

    Sometimes, you just have to go, Hmmm. Probably just hedging bets, I guess.

    Ag80 (f67beb)

  16. A whole lot of cheering on lefty blogs about this, because those ‘bastard’ banks won’t be as successful now.

    I don’t get why it’s cool to give them bailouts, but also cool to remove industries from their portfolio. But the real problem is that the federal government wants more power over which schools do well, which students get money, and how much control they have over your destiny.

    Now, actual productive people are going to be subsidizing community organizers, social workers, and English major bohemians. And this didn’t require any debate? No open doors and cspan coverage? Just shove it in some bill about something else and ram it on by.

    We need to look at our education system and realize it’s not just for college bound students, and people should have something usable after graduating high school. Instead, it’s just another money handout for no clear reason.

    dustin (b54cdc)

  17. JVW, the difference is that students are graduating with more debt than when you were in school. College tuition has been increasing at more than double the rate of inflation for a long time. That’s outrageous too.

    SPQR (26be8b)

  18. Isn’t that always his focus?

    Focused on what he is doing . . . not on what he isn’t doing.

    Icy Texan (28de63)

  19. From Wikipedia/from DOE:
    “Discretionary income is income after subtracting taxes and normal expenses (such as rent or mortgage, utilities, insurance, medical, transportation, property maintenance, child support, inflation, food and sundries, &c.) to maintain a certain standard of living.[5] It is the amount of an individual’s income available for spending after the essentials (such as food, clothing, and shelter) have been taken care of.”

    According to DOE’s definition, it appears what is left is rather small, in reality what’s available for savings. Perhaps there is another loan program specific defintion I’m not aware of.

    The transportation category is a an open ended spending item. Should you opt for a Porsche instead of a used Ford Focus if the Porsche puts your disposable income at zero. You can travel in style and avoid paying anything.

    The present system is prone to abuse. As long as a student remains a student, he or she can avoid making loan repayments. Community colleges/ night classes can keep you afloat. With the new “20 and forgiven,” you don’t have to do it forever.

    Corky Boyd (a311f8)

  20. But, here’s the deal: The admissions dean said that they would no longer be accepting college loans from private sources because of the pending legislation that would require all loans to be federal.

    This mystifies me. Why would the colleges care where the money comes from? Therefore, I infer from this that the colleges don’t have a choice in the matter, either, and won’t be allowed to accept a student loan from any other source.

    If that’s true, this is outrageous.

    Some chump (c2555f)

  21. “The second is that today’s college student thinks he/she is entitled to a lifestyle of a well-off adult – and they’ve been sold that its OK to borrow money to have that.”

    SPQR – Barack and Michelle bought an expensive condo before they paid off their student loans.

    daleyrocks (718861)

  22. Even before the law passed, many universities and lenders had already terminated students’ private borrowing options:

    The University of Texas announced this week that it is cutting the program under which students borrow from private lenders in favor of the U.S. Department of Education’s William D. Ford Federal Direct Loan Program .

    Starting in the summer, UT students will borrow directly from the government.

    “We simply can’t afford the risk of the disruption in the flow of loans to students who rely on them to pay their college costs,” said Tom Melecki , director of student financial services. Switching lenders may be inconvenient for some students, he said, but “the lenders who have supplied the majority of our loans may not be able to.”

    Bank of America, which services 20 percent of UT’s loans, quit the student loan program in December, UT officials said. And other large lenders have told UT that if federal aid is not extended past the deadline , they won’t have access to the low-cost capital they need to make student loans.

    Nearly two-thirds of 410 colleges and universities surveyed nationwide said they have made or will make the switch to the direct loan program, according to a November study by Student Lending Analytics.

    For instance, here’s a 2008 story about a Georgia student who lost his financing after the lender opted out of the market. His government loan interest rate is 12% while his private loan rate was 8%. Great deal.

    DRJ (daa62a)

  23. The higher interest rate makes sense, since this is meant to pay for health care for old folks, just like young people’s premiums will.

    These people will largely vote for Obama again if they aren’t extensively reached. At least they will put their money where their mouths are.

    12% is too high a rate for a credit card in my house, and we aren’t exactly the Rockerfellers. It’s not secured debt, but there’s no way out of it. The high rate is really unfair, especially if it’s a monopoly rate.

    dustin (b54cdc)

  24. But the President’s focus today will be more about what the bill does than what it does not.

    And that’s all that counts. We must portray the Messiah President in the best light possible!

    P.S. Wonder if an internship at the Heritage Foundation, for instance, would count as pursuing public service and worth loan forgiveness….

    Patricia (fa8e06)

  25. I wonder what level of discount you get at “State” for cash?

    AD - RtR/OS! (a2cec7)

  26. SPQR, I kind of doubt if students are graduating with more debt than I did. According to a student financial aid website, the average bachelor’s degree student in 2009 graduated with between $23k and $28k of debt, depending on what metric you use. I graduated in 1992 with about $20k in loan debt, which adjusted for inflation would be approximately $30.5k in 2009 dollars.

    That’s not to suggest that you aren’t correct in saying that the exploding cost of college is driving this. I only mean to suggest that the debt load that I incurred is not unmanageable if you get serious about paying it back.

    JVW (fd30ab)

  27. if you get serious about paying it back

    therein lies the rub.

    redc1c4 (fb8750)

  28. Yep, redc1c4. Worst of all, as Patricia alludes to above, is the fact that the politicians now get to decide which vocations are worthy of loan forgiveness. Want to bet that working as a “community organizer” or as a legislative aide will be covered, but working for a pro-life charity or as a fundraiser for a private school will not?

    JVW (fd30ab)

  29. Another factor is student loan debt probably isn’t the only debt students have. Up until recently, even unemployed college students could get credit cards that some/many use for things like eating out at restaurants and bar-hopping. I realize it’s ancient history but in the 1970s when I was in college, we ate a lot more Ramen noodles and Kraft macaroni & cheese than some of today’s students eat — especially at the end of the month when money was scarce.

    DRJ (daa62a)

  30. but at least beer was cheaper then DRJ!

    redc1c4 (fb8750)

  31. See, the loan forgiveness has it backwards.

    We shouldn’t be subsidizing professions like Social Work or Community Organizer. We know those professions barely even need an education. We need more engineers, doctors, chemists, and scientists. But those people make enough money to get beyond the loan forgiveness threshold (usually).

    It would make more sense to make loans easy to get for majors that will earn the money to pay them back. Tie interest rates to grades, degree progression, and the earning potential of the degree. Thus, a freshman C+ average English student pays a higher interest rate than a graduate student, with a 3.0 average in Mechanical engineering.

    I know, I know, that just reeks of logic. Instead, it’s time to allocate resources to ‘historically black’ universities. We’re doling out money for education on the basis of skin color, like we’re turn of the century democrats or something.

    dustin (b54cdc)

  32. “Thus, a freshman C+ average English student pays a higher interest rate than a graduate student, with a 3.0 average in Mechanical engineering.”

    I don’t have a problem with rates being tied to grades. I think that’s an outstanding idea. One thing I’d like to see stopped is giving loans for ‘technical’ schools teaching things like cooking and bartending.

    Don’t think it should be tied to the major though. How can an English major afford to pay higher interest than a mechanical engineer? Engineers make far more money than English teachers. But both are needed in our society.

    As for eliminating the middleman, I’m wondering why conservatives, who want the govt to stop paying too much for things. Why should govt take all the risk while these banks make money at our expense?

    JEA (dffa7e)

  33. “A side effect of the passage of health care is the Obama Administration’s reinvention of student loans into a government program.”

    It was a government program before this.

    imdw (017d51)

  34. “But I’m curious how those loan cap recipients will react when they figure out they will have to give the government detailed proof of their annual income and expenses for 20 years, or until they pay off their student loans?”

    You mean like by filing taxes? I suspect they’ll be happy to have this cap rather than pay more than 10%.

    imdw (017d51)

  35. “You mean like by filing taxes?” – imdw
    Do you file detailed expenses with your taxes? I think not.

    Corwin (ea9428)

  36. The repayment caps turn student loans into a new entitlement welfare program.

    Grove City and Hillsdale colleges do not participte in any Federal programs, so none of this will apply to them. It will be interesting to see the difference that makes over time.

    Amphipolis (b120ce)

  37. I could be wrong, but I thought Grove City accepted students using fed loans- I could be wrong about that.

    I wonder if Hillsdale is planning on expanding.

    I can see the bumper sticker, “My Daughter and my Money go to Hillsdale (and not one penny to the feds!!!)”

    MD in Philly (59a3ad)

  38. “Do you file detailed expenses with your taxes? I think not.”

    Only some expenses. But you’ll note that this can be accomplished without ‘detailed expenses.’ You can come up with an estimate for discretionary income based on some factors, like location and family size.

    imdw (e57370)

  39. “You can come up with an estimate for discretionary income based on some factors, like location and family size.”

    And that won’t raise the Audit flag?

    1) this will give the government more control over how people spend their money. It will define discretionary income as it sees fit. I am not ok with that.

    2) if the government is going to forgive any outstanding debt after 20 years (or some period), who pays for that? Answer: those who are more frugal with their spending. Which is how most government programs, as thoughtful as they might be in theory, end up screwing the people who are thrifty.

    Corwin (ea9428)

  40. One thing I’d like to see stopped is giving loans for ‘technical’ schools teaching things like cooking and bartending.

    I agree wholeheartedly – those schools have one of the most egregious scams going, promising all kinds of awesome jobs after bilking some poor sap out of approximately $30 – 40K. Their stats for placing students in said awesome jobs are usually nil. The Pell program is mostly to blame here, and it needs serious reform.

    Dmac (21311c)

  41. “And that won’t raise the Audit flag?”

    I mean the government would come up with them.

    imdw (ab76e2)

  42. I bought an 88 Suzuki GSXR 750 with MY student loan…

    Frank Drackman (c2d1a4)

  43. my student loans, I payed them

    idiot (71f6cb)

  44. Paid mine, too. Fool that I am. A couple questions:

    What is a luxury and what is an expense? Where do beer and cigarettes figure? Cable TV? How much rent or car expense is extravagant? Who decides?

    Is this forgiven loan amount taxable income?

    Kevin Murphy (3c3db0)

  45. “The repayment caps turn student loans into a new entitlement welfare program.”

    Entitlements don’t have to be paid back. Loans do.

    JEA (dffa7e)

  46. I guess JEA did not read about the artificial caps and forgiveness plans …

    JD (9d8cb8)

  47. What is a luxury and what is an expense?

    Whatever Commissar Barack says it is.

    Patricia (fa8e06)

  48. JEA, try rereading what you quoted.

    SPQR (26be8b)

  49. There was an construct — Igli — in Heinlein’s Glory Road that Oscar, Star, and Rufo eventually defeat by feeding it to itself. Never thought that I’d see my government doing that to itself voluntarily.

    htom (412a17)

  50. Are the federal subsidies to private loans an “entitlement program”?

    imdw (8222e7)

  51. If you get something from the Feds, without in some way paying into it – wouldn’t that be loosely defined as an entitlement? Roads, bridges, etc. we help pay for. Unemployment benefits, generally a worker pays into prior to benefiting from. But a loan program where it is capped and written off – wouldn’t that be an entitlement? And what follows, it’s that entitlements are simply the mechanism used to redistribute wealth from those who pay into it to those who do not.
    Which Senator said Entitlement = Right? When did we start down this dead end road?

    Corwin (ea9428)

  52. imdw….anything that the government gives you for nothing….and forgiving loans that you take out after 20 years is “something for nothing”….is an entitlement…something that a person thinks they deserve because they sleep on American soil….

    Now, yes, my answer may be sarcastic, but please, if you can, dispute the point….

    reff (b996d9)

  53. Fear of student loan debt is one of the primary reasons I’m working through law school; it doesn’t keep me from taking on any debt, but it means I come out much, much, much better off than most of my coworkers. (That, and since I’m still employed as a software engineer, I’m not financially dependant on the awful legal job market).

    But I’ve got to quibble with this:

    The second is that today’s college student thinks he/she is entitled to a lifestyle of a well-off adult – and they’ve been sold that its OK to borrow money to have that.

    The student loan budget at local undergraduate schools basically allocates on the order of $15K/yr for living expenses.

    That’s not the lifestyle of a well-off adult.

    [I’m living the lifestyle of a well-off adult. But I’m paying for it by working full time in a high-paying job. :)]

    I would add that while we’re axing programs, graduate programs in history and the humanities should be reduced dramatically. Except for a small number of people, those degrees end up being worthless – and that’s fine as long as the people going in understand that and are treating it as consumption rather than investment. (I’d love to get a graduate degree in history after I retire. I would be a lunatic to do so now.)

    aphrael (73ebe9)

  54. Students should take a vow of poverty, because that’s only time in life when it is actually fun.

    But..when I was in school in the early 80s, there were NDSL and GSL loans at 5% and 8% respectively. GSL came via a local bank but was guaranteed by the govt. Private loans were just starting to come in when I graduated in 1985, at the rate of 12% and they seemed to be designed for the law school-bound etc.

    So what exactly is different now?

    cassandra in MT (5a5d33)

  55. Re: MD in Philly Post 37

    Grove City College does not accept nor does it certify the following–any loans under the Federal Family Education Loan Program (Stafford and Parent PLUS Loans); Pell Grants; Robert C. Byrd Honors Scholarships; President’s Service Challenge Scholarship through the Corporation for National and Community Service (also known as AmeriCorps Scholarship); Paul Douglas Teacher Scholarships; National Science Scholars Program Scholarships; National Academy of Science, Space and Technology Grants; Presidential Access Scholarships; ROTC Scholarships; educational benefits from the Department of Veterans Affairs; assistance through the Office of Health and Human Services (such as grants from the Office of Vocational Rehabilitation or Blindness and Visual Services); JTPA; Academic Competitiveness Grants; SMART Grants; Federal Supplemental Educational Opportunity Grants or any other scholarships or loans that may be construed as providing direct or indirect federal aid to the College. The College also not not allow any student to register for classes if it is aware that a student has accepted or received such federal financial aid for that semester.
    http://www.gcc.edu/F_A_Q_s.php

    Amphipolis (b120ce)

  56. No ROTC? Traitors.

    imdw (e66d8d)

  57. yeah, who do they think they are, the President’s alma mater Harvard?

    SPQR (26be8b)

  58. “The College also not not allow any student to register for classes if it is aware that a student has accepted or received such federal financial aid for that semester. ”

    This is probably going to lead to more kids financing their education with credit cards.

    How can an English major afford to pay higher interest than a mechanical engineer? Engineers make far more money than English teachers. But both are needed in our society.

    Both are needed in our society? Well, to some extent, this is true. But those who are truly brilliant writers don’t need an English degree. We need a few PHDs in this and many other liberal arts fields, but not the massive number of people who go into these areas (by the way, I minored in English and it’s been helpful to me).

    But we need mechanical engineers a lot more than English majors, and we should price accordingly. Fact is, though, that succeeding in engineering in a US school is usually very difficult, and price adjustment alone won’t solve the problem I think we have. It’s more complicated.

    But I think a lot of majors that have far higher numbers of students than society really needs should subsidize majors with far fewer. And I think majors that earn more money should pay a much lower interest rate because they are a safer bet and generally more useful to society anyway.

    But like I said, this is more complicated. I know some fields, such as pharmacy, have far too few graduates, and that’s just because of artificially controlled student class sizes (to keep wages up). What I can point to is the risk of giving a Pharm D. student a loan is very low, and the risk of giving a Sociology student the same loan is much higher.

    Dustin (b54cdc)

  59. Out of curiosity, why does grove city not accept any sort of federal scholarship grants? what’s their reasoning?

    aphrael (e0cdc9)

  60. I just wish the government would get out of the business of student grants and loans. Back in 1983, my tuition was something like $487.00 per semester at Memphis State, now the University of Memphis. I paid for it myself while making all of a whopping $127.00 per week at my grandfather’s drycleaners. No one in a low paying job can afford school now without loans or grants. Loans put you in debt, and grants simply jack up the costs of education through massive wealth redistribution programs.

    Debbie (b91491)

  61. Good question, alphrael. One possibility is to avoid Federal regulation which gets its jurisdiction from Federal funding/loans.

    SPQR (26be8b)

  62. This looks more like a revenue generator for universities that are running unsustainable budgets than anything that will actually lower the cost of education–which makes it appropriate that it would be packaged with the healthcare bill, since it is designed as a revenue generator for a broke government rather than as something that will lower the cost of healthcare.

    The fact of the matter is that despite the exponential growth that tuition rates have gone through the last 15-20 years, universities are constantly fighting to keep their budgets above water and are constantly asking for more government funding.

    It also brings up the question of why Congress and the administration didn’t simply eliminate the interest rate for these loans, because the odds are pretty damn good that the balance of these loans will fall on the taxpayers, not the recipients. Since Uncle Sugar can simply print more money, it doesn’t really matter anymore how much they charge, because they will get the money regardless of whether the students eventually pay off the full amount–and with the repayment caps and debt forgiveness clause, I’d be willing to bet my retirement that most of the relatively worthless “Everybody Gets a Trophy” generations will simply bide their time until the taxpayers cover the balance of their “loans”. The universities basically have full access to the government printing press now thanks to this law, turning tuition into yet another giant leech on government revenues.

    This thing has moral hazard written all over it, so it’s hardly surprising that Obama was happy to sign it.

    Another Chris (2d8013)

  63. aphrael, I can’t speak for Grove City, but here is the reason that Hillsdale College does not accept federal involvement, quoted from their website:

    Hillsdale’s modern rise to prominence occurred in the 1970s. On the pretext that some of its students were receiving federal loans, the Department of Health, Education and Welfare attempted to interfere with the College’s internal affairs, including a demand that Hillsdale begin counting its students by race. Hillsdale’s trustees responded with two toughly worded resolutions: One, the College would continue its policy of non-discrimination. Two, “with the help of God,” it would “resist, by all legal means, any encroachments on its independence.”

    Following almost a decade of litigation, the U.S. Supreme Court decided against Hillsdale in 1984. By this time, the College had announced that rather than complying with unconstitutional federal regulation, it would instruct its students that they could no longer bring federal taxpayer money to Hillsdale. Instead, the College would replace that aid with private contributions.

    JVW (fd30ab)

  64. “…But I think a lot of majors that have far higher numbers of students than society really needs…”

    If you look at the average SAT’s for those undertaking Engineering majors, and those entering Ed-Schools, you would wonder why we would give any money at all to those on a teacher-track.
    Perhaps if the Ed-Schools discriminated a bit more in their acceptance policies, the quality of K-12 teaching in this country might actually improve, instead of being on the fast-track to the sewer.

    AD - RtR/OS! (6f84de)

  65. Dustin 58:

    This is probably going to lead to more kids financing their education with credit cards.

    It has been their policy for decades. Students like my daughter get loans, but they are not government loans.

    These schools prove that it is possible to run a school with no federal involvement. Incidentally, Grove City has very low tuition. As the feds make college more affordable, colleges hike their tuition. Supply and demand.
    http://www.gcc.edu/Benefits_of_Independence.php

    They do not participate in Federal programs in order to avoid Federal regulatory control. The Supreme Court case was Grove City College v Bell.

    Amphipolis (b120ce)

  66. Amph, I don’t like that policy, but I respect it.

    To be fair, it’s not the school’s fault that the federal government is intruding beyond what they find acceptable. The bad result for students is really the fault of big government, but it’s a bad result, in my opinion.

    I hope your daughter and the school do well, and I’m sure they are better off for not having federal interference.

    Dustin (b54cdc)

  67. “Even the college bound philosopher can learn how to change an engine, or weld, or fix plumbing. I wish this were part of getting a diploma.

    – Dustin

    I agree with this. I wish the trade skills were more effectively integrated into the main body of universities. I would’ve learned a trade, in addition to my primary degree. As it stands, I would’ve had to go to another school down the road. I still could’ve done it (and I still considered it), but it would’ve been a much bigger hassle. Plus, it’s expensive (as you point out).

    Leviticus (4226b5)

  68. Comment by Amphipolis –

    Thanks for correcting my understanding on Grove City.

    Lest anyone misunderstand and think Hillsdale wants to avoid integration, etc., they’ve had a racially integrated school, as well as accepting women, for over a century. They were not going to let the feds tell them what to do or what they should do since they had been doing it longer than the feds were. They took the stand that they would continue to do what they thought was right because they wanted to.

    I imagine they might have wanted to avoid number counting to not bow to quotas, as I think they are into fairness and accomplishment, not appearance.

    MD in Philly (59a3ad)

  69. Now wait a minute, I see something entirely different here….
    Wasn’t there something in either TARP or the stimulus that REQUIRED any student receiving government loans to do community service for a number of years?
    If I am not mistaken, I see this as a way to force students into something more ominous.
    If anyone has more info, confirming or refuting this, please post it.

    bizjetmech (022d42)


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