Schumer Seeks Student Loan "Protection"

Once again we find that our Senators are absolutely clueless as to the nature of the economy and how easy credit has pushed up costs, especially in higher education.

Education costs have risen well above the rate of inflation for more than a decade, and that has been fueled by the easy available of student loans that are subsidized by the federal government. Higher tuition forces more students to turn to the student loan programs (Stafford program at the federal level), plus Pell Grants and other state programs that seek to make education more affordable to more students.

Now, Sen. Chuck Schumer (D-NY) wants to make sure that credit remains available to students who want to pursue higher education.

New York Senator Charles Schumer announced yesterday that he is taking steps to protect college students and their families from the credit crunch.

The senior senator said he has asked Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke to pay special attention to the student loan market as they carry out the government bailout plan.

He also wrote to every college president in New York asking those who do not participate in the federal direct loan program to consider enrolling.

Keeping higher education affordable is a laudable goal, but as we've seen with "affordable" housing, the results are anything but affordable - just witness the $700 billion bailout, and the stock market jitters that saw the market shed nearly $1.5 trillion in value yesterday.

People are borrowing vast sums of money to go to college and are incapable of repaying those loans. I'm carrying a mortgage and student loans, and thankfully I have a job that enables me to pay for both. I was able to do so because I could attend a state school and worked throughout. That can't be said of many who go to private colleges and universities where costs are out of control, and would be akin to taking out a mortgage with no ability to repay right away.

You have undergraduate programs in places like NYU or Boston U costing $45,000 a year or more, meaning that unless you're independently wealthy or at the top of your class, you're going to be taking out serious loans just to get through college. How exactly is that affordable.

If credit tightens on education loans, that means that the colleges and universities that have made a ton of money on students paying inflated tuition costs, will have to make due with less. To put it another way, student loans are not subsidizing the student, but are subsidizing the colleges and universities around the nation. It's time to rein in that, which is the opposite of what Schumer wants.

UPDATE:
Don Surber emails to point out what should have been quite obvious - college isn't affordable because of student loans. If students had to pay cash, tuition would drop. Unlimited cash (in the form of student loans) equals unlimited price.