Recently there have been "demands" to forgive student loans: here's one from The Guardian. I think this is a rather bad idea. If providing free college education is a national goal, like healthcare, then there has to be some rational planning. You can't just throw money at anyone and everyone who wants to go to some college. What about those who have paid off their loans, or who are working hard to avoid having to borrow? What programs should be acceptable at which schools, and which students stand a chance of success?
What might be a reasonable step, and an idea which the Occupy Wall Street movement might take up, is to limit the interest charged on any and all federally-backed student loans to the lowest rate of interest charged to any American bank. If Bank America or Citi can borrow at near zero interest rates directly or indirectly from the Fed, and invest in T-bills (see here, for example) instead of businesses, then students should be able to borrow money for their education at the same rate. What's fair is fair.
Here are other ideas that readers have suggested the OWS movement might endorse with near unanimity:
Remove the cap on earnings subject to Social Security.
Put everyone on Medicare. Charge accordingly, but eliminate the private insurance companies and allow government to negotiate hospital charges and pharmaceutical costs for its citizens.
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BofA and Citi have a much better credit quality profile than an individual student. Two entities with much different credit worthiness should not be able to borrow money at similar rates.
ReplyDeleteWhat good will eliminating private insurance companies do? Last year, the five largest for-profit insurance companies made about $12 billion in profits. That's about 0.5% of total healthcare spending.