The Problem with Sallie Mae only came by not shutting it down in the first place

My biggest problem with Sallie Mae is that it was created by the government.

My second biggest problem is that it should have immediately been shut down and all loans cancelled i.e. wiped off the books -- not repurchased by a private debt collectors, which wouldn't eliminate the problem of the debt itself (not just government control) -- rather than privatized.

Sallie Mae is the perfect example of privatization gone wrong and why government agencies that are in the business of giving loans need to be closed down and the debts cancelled.

I am not in favor of debt forgiveness for borrowers if that means using one set of taxpayers' dollars to pay the rest of the balance of another taxpayer's loans. That just adds to the national debt.

Cancellation is key.

Tom Woods Explains The Student Loan Racket

I knew this and wrote about it December 2010. I write:

What bothers me so much about this statistic is that colleges can keep the price of tuition higher than what it would have possibly been if the student loans weren't there in the first place.

University planners, knowing that financial aid is guaranteed, plan expansion based on somewhat false signals in the markets (federal grants, student loans). It does not matter how big or small the false signal.

I remember my state of mind when writing "somewhat false signals." I was too nice. They are false signals.

Excerpted from Rollback:

Of course, it is the subsidies themselves that push tuition costs ever higher. Here’s the obvious point everyone pretends not to realize: colleges know the students have access to low-interest loans courtesy of government. Aware that prospective students enjoy artificially increased purchasing power, college administrations raise tuition (and cut back their own aid programs) accordingly. When tuition thus continues to rise, as any fool could predict, we hear huzzahs for the government – for however could students pay this high tuition without government assistance? It is the classic case, as Harry Browne said, of the government breaking your leg, handing you a crutch, and saying, “See Without me you couldn’t walk.”

Thomas Woods, The Student Loan Racket: Ron Paul Right Again

Video: Peter & Dick Morris Go Toe-to-Toe!

Dick Morris advocates a police state! Listen to this shocking interview.

What a big cry baby!!!

The Student Loan Scam

Yeah, the list of student loan abuses is just that long.

Check out the source here. (The picture is much bigger.)

The Immorality of Student Loans

In a recent commentary, the Rev. Michael P. Orsi expresses why he thinks federal student loans are detrimental to America.

It also presumes that students, some of whom owe an excess $200,000, can pay the interest and eventually the principal. The federal government’s assumption of all student loans as part of the Obamacare package has not only added to an insurmountable deficit but has put most loan recipients into perpetual government clientage.

Read "Federal Student Loans Are Detrimental to America"

Student Loan Reform on Student Loan Laws

I found this on Facebook:

Donald Trump can file for bankruptcy for losing all of his money in the stock market and making poor business decisions but college students are not allowed to do so with their student debt. The issue isn't that we took out too much money, it's that companies such as Sallie Mae keep trying to screw us in order to make more money on late fees and defaults. It's not fair! So, it's time to organize and make sure people are aware of this issue so they don't make the same mistake I did. I trusted Sallie Mae.

Our Student Loan Addiction

This image was taken from the Ripon College's Scholarships and Financial Aid page.

While Federal Grants are at 26 percent and state/local grants are at 40 percent, the amount of freshmen holding student loans is a staggering 80 percent at this college.

What bothers me so much about this statistic is that colleges can keep the price of tuition higher than what it would have possibly been if the student loans weren't there in the first place.

University planners, knowing that financial aid is guaranteed, plan expansion based on somewhat false signals in the markets (federal grants, student loans). It does not matter how big or small the false signal. They can be lilliputian or large. As long as their is some sort of intervention, there is always going to be some level of malinvestment on behalf of the university because the distortions give a false signal that savings for colleges are there even when they are not. Eventually, the number of students able to pay for college will shrink once the price of tuition becomes too high and the true number of adequate savers will be revealed.

Even the adequate savers get punished because they, too, pay an artificially high tuition price.

Budget cuts, department cuts, tuition hikes, and major cuts will ensue as a result of decreased revenues. However, they would not have to happen, or at least be as severe, I think, if the distortion were absent and university accountants were allowed to plan growth within budget and naturally.