Education Financing

From a New York Times op-ed on Education Financing:

To avoid the next credit bubble and debt crisis, we need to eliminate government subsidies and link tuition financing to the incomes of college graduates.

Yeah I agree we need to eliminate government subsidies but I don’t think we “need…to link tuition financing to income of college graduates.” We don’t need to do anything. That’s the beauty of private property. No one cares more deeply about optimal financing regimes for education than the owner. Leave the government out of it completely.

Between 1977 and 2009 the real average cost of university tuition more than doubled.

So, let’s hear it, Gen Y, has the government helped with your desire for an affordable education? No? Why not? Well, it turns out that people counseling you to support the transfer scheme of college financing aren’t necessarily doing so in your best interest…

Since the government guarantees student loans, lenders have no incentive to lend wisely. All the burden of making the right decision falls on the borrowers. Unfortunately, 18-year-olds aren’t particularly good at judging the profitability of an investment without expert advice, and when they do get such advice, it generally counsels taking the largest possible loan.

That’s right, kids. Your college professors, university administrators, college football coaches, loan agents, etc. that encourage you to make “the most important investment of your life” might be a little more interested in their own financial well-being than yours. Surprising, I know…

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