The Market Ticker
Commentary on The Capital Markets- Category [Education]

Read this post first.

Now contemplate this: Tomorrow you elect me President of the United States and you also give me a vial of pixie dust.  I can blow it over the gallery during my first State of the Union Speech and during the next 48 hours the lawmakers will pass any one bill I propose, unchanged.

Now I could use that to try to make myself King, but I'm not going to do that.

I'm going to pass the following law:

All federal student loan programs and all federal guarantees of educational debt, along with all special bankruptcy protections for such debt are hereby declared null and void without exception.

The effect of this would be:

  • No more federally-underwritten student loans of any sort; Stafford, PLUS, etc.  The FASFA would disappear overnight as there would be no program to which it applies and no means to coerce you to fill it out.

  • If you had existing loans and couldn't pay, you could declare bankruptcy and discharge them exactly as with any other unsecured debt (e.g. like a credit card.)  It would ruin your credit for seven years, but that's it.  Of course like any bankruptcy it would also cost you whatever assets you had, but if you have nothing there is nothing to be forfeited.

What would happen to the price of college?  It would drop like a stone.

Calculus hasn't changed in a hundred years.  Neither has much else in the physical sciences; if anything it's gotten (a lot) cheaper.

For example it's far cheaper to learn how to program today in terms of required equipment than it was in the 1970s or 80s; in the early 1980s my first computer cost $2,500 and the mainframe I was learning on at college was almost-certainly worth more than a million, never mind needing to be in a special, 24x7 air-conditioned room with full-time staff (expensive!)   Today I can buy a computer for $35 (literally) that does hundreds of times more work than my $2,500 machine of the 1980s and in fact it is perfectly suitable for code development and learning.

How do I know this?  The latest version of my home control software was literally written on one and it's running on the same machine.  $35, no kidding.  An LCD monitor (nice but not necessary; you can use your LCD TV) costs more than the machine does.  It's "disk" is a $10 MicroSD card (the very same card you put in your camera or cellphone) and the operating system (and programming languages) for it are free, community-developed software.

Has classical literature -- really anything in the liberal arts -- changed in the last years?  No.  So since I can still buy a paperback copy of Grapes of Wrath for the same (approximately) amount as I could in the 1980s, why should such a degree or courses in same cost any more?  They most-certainly should not.

Faced with no "free money" spigot colleges would have two choices -- find ways to cut costs to the point that they could educate and house you for a few thousand dollars a year or their campus would be empty and they would be out of business.  Period.

They'd adapt.  Oh sure, some would close, but that's not bad, it's good.  We need people to learn how to do things like weld, pull electrical wire, plumb houses and fix cars.  None of these jobs require college degrees but they do require training.  Diversity would increase.

The college debt problem would disappear, and not just on a forward basis for new people going into school.  If you were sold a "degree" that was worthless, and you were unable to find a job, you could declare bankruptcy and void that debt.  Today you can't do that, but tomorrow you could.

So why isn't Sanders proposing this?

I'll tell you why: He doesn't want to fix the problem, which came about by giving the Federal Government the ability to indefinitely turn you into a slave once you went to school and accepted their "loans."  The presence of all that "risk-free money" (for the college, not you) is why the price went up so much.  This is basic economics -- the more money chases something, the higher the price and the more competition, along with allowing the market to pass judgment on the value of things (which bankruptcy does) the lower the price.

If you want a solution to the college cost and debt problems there it is.

Now find a politician that intends to do this, and refuse to support all of them that do not.

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