ICYMI: Nicholas Giordano Discusses Student Loan Crisis

Who Should Be Responsible For Student Loan Crisis: Taxpayers or the ones who caused this crisis?

Professor Giordano joins Tucker Carlson Tonight to discuss the student loan crisis and who bears ultimate responsibility.

Student loan forgiveness, especially off the backs of taxpayers, is inherently wrong, unrealistic, and would amount to fraud. First and foremost, this would be enormously expensive and largely unaffordable especially in the midst of coronavirus. Also, it eliminates the real culprits of the massive student debt crisis and that’s the colleges and universities.

How the Student Loan Crisis Got So Bad

Since the government got into the student loan business, tuition increases have outpaced inflation, wage growth, and just about every other sector because these institutions know that students will increase the size of their loans to meet the tuition increases. Even worse, the academic institutions manipulate students, knowing that these students have been programmed to believe that if they don’t go to college and earn a degree, they will not be successful. They are fully aware that students are not looking at the long-term implications of student loan debt and will only realize the debt burden once they graduate. The institutions encourage students to take out the maximum amount each semester to cover, not only tuition but books and living expenses. Another failure on the part of these institutions is when they offer useless degree programs where it will be nearly impossible for a student to find a job once they graduate.

Students also bear some responsibility. Many students don’t understand debt burdens and compound interest. They also don’t do the research to determine what’s an appropriate debt to occupation/potential salary ratio. It doesn’t make sense to take out $100,000 in student loans to become a police officer or a teacher, yet that’s exactly what we are seeing. Many students also don’t do the research to determine whether there is projected growth in their field of study, or if it’s anticipated that there will be a contraction of job availability in that field of study. There is nothing worse than having taken on an enormous student loan burden and get a degree, only to be employed as a customer service representative at a department store because there are no jobs available. A study conducted by the Federal Reserve Bank of New York found that only 27% of college graduates work in a field related to their major. (Federal Reserve Bank of NY) This illustrates the uselessness of many majors. A two-year general studies degree may be a much cheaper alternative and prevent future debt burdens.

Student Loan Forgiveness- Who Loses?

The biggest loser of any student loan forgiveness is the taxpayers, particularly those taxpayers that worked 2-3 jobs to pay for their child’s education so that their child won’t have student debt when they graduate. While debt-ridden students and parents may think they gained, in the long-term, they actually lose as sooner or later we will have the find the money to pay for student loan forgiveness and will result in a permanent tax increase. In addition, what are we teaching students by saying they assume no responsibility when they sign a promissory note/contract to pay back the loan? This will only further the entitlement culture where many will make increasing demands for government intervention in all aspects of life including car loans, mortgage notes, and any other debt.

Student Loan Forgiveness- Who Wins?

The biggest winners of student debt forgiveness are the universities, as they will avoid any tough questions when it comes to the cost vs. benefit analysis of a college education. It’s essentially a bailout to these institutions and allows them to continue raising tuition and offering useless degree programs even as they cut costs by getting rid of full-time professors and replacing them with adjuncts. Think about it logically. At the same time, these institutions are cutting costs by getting rid of full-time professors and relying on adjuncts, they are increasing tuition rates across the board. It’s a scam of epic proportions.

The politicians will also be the biggest winners. They will continue to allow the gravy train of funding to these colleges, including those with billions of dollars in endowments, and in return, those institutions will provide full support to those politicians through donations, positions when they leave office, etc. Just look at the revolving door of the institutions when it comes to the political and academic class.

How to Fix This Crisis?

There are solutions to fix the student debt burden going forward and potentially eliminate student debt in the future. First, get the government out of the student loan business and stop with guaranteed student loans. If students have to get loans based on credit rating, colleges would have no choice but to lower tuition rates in order to remain competitive and attract students to their campus.

Students should also be encouraged to attend a community college first. Community colleges are very affordable and don’t require a huge investment. If a student feels it’s necessary to pursue a 4-year degree, they can always transfer the credits and save themselves tens of thousands of dollars in the long run. They can get a quality education at nearly half the cost.

The best way to eliminate the problem is to hold the institutions themselves accountable. The universities should be forced to pool their billions of dollars in endowments and reduce the student loan burden they created. Remember, these institutions enticed students by promising careers and success. Perhaps if we tied student success to tuition costs, these institutions would act far more responsibly and put student interests first. This is a complicated strategy, but many institutions would immediately do away with useless degree programs with no real career paths. They would also be more fiscally responsible when advising students about how much they should be taking out in student loans. Reforming our institutions and the rules governing student loans would finally place the burden where it belongs- the institutions themselves.

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