Student Loans Are A Drag On The Economy

"CBO’s calculations of subsidy costs for student loans follow the procedures specified in the Federal Credit Reform Act of 1990 (FCRA). Under FCRA, the discounted present value of expected income from federal student loans made during the 2014–2024 period is projected to exceed the discounted present value of the government’s costs. (Present value is a single number that expresses a flow of current and future income or payments in terms of an equivalent lump sum received or paid today; the present value depends on the rate of interest—known as the discount rate—that is used to translate future cash flows into current dollars.) Credit programs that produce net income rather than net outlays are said to have “negative subsidy rates,” which result in negative outlays. The original subsidy calculation for a set of loans or loan guarantees may be increased or decreased by a “credit subsidy reestimate” in subsequent years, on the basis of updated valuations of the present-value costs of the cash flows associated with the outstanding loans and loan guarantees.

FCRA accounting, however, does not consider some costs borne by the government. In particular, it omits the risk taxpayers face because federal receipts from interest and principal payments on student loans tend to be low when economic and financial conditions are poor and resources therefore are more valuable.

Fair-value accounting methods account for such risk and, as a result, the program’s savings are less (or its costs are greater) under fair-value accounting than they are under FCRA’s rules."

On page 63 of: http://www.cbo.gov/sites/default/files/cbofiles/attachments/...

See also: http://www.cbo.gov/sites/default/files/cbofiles/attachments/... (Fair Value Accounting for for Federal Credit Programs) and http://www.cbo.gov/sites/default/files/cbofiles/attachments/... (Fair-Value Estimates of the Cost of Federal Credit Programs in 2013)

LOL

EDIT - sorry, just checked it out, and yes it does. incredible :D this is it's way of supporting college education, by making money off of it?

1) Spending on non-faculty salaries have gone through the roof with the exponential growth of well paid but educationally marginal deanlets, deanlings, and administrators.

2) Although total salaries for the tenured professoriat hasn't necessarily exploded, salary per classroom-student hour has as tenured professors have seen their teaching requirements fall, and as large lectures are increasingly taught by poorly paid adjuncts.

A generation ago a 3-3 or 4-4 was typical for a tenured liberal arts or social sciences professor, and most freshmen seminars were taught by full faculty. Today many teach 2/2 or even 2/1, and they might well be all be graduate / upper class seminars and supervising student research.

The problem isn't with fields like comp sci or history where people don't need a degree to work as professionals. The problem is with institutions with guilds like like American Bar Association and American Medical Association. You need a license to practice, and almost everyone only gets that after spending over $100,000 on accredited schools. (Are there exceptions?)

Soooo ... the price of education in every OTHER field will go down, but not med schools or law schools or other schools which prepare you for licensing.

I am a firm believer that basic medical insurance and education should be collectively bargained by the government. And we do - most libertarians and republican fiscal conservatives are clamoring for vouchers over public schools. But vouchers are the same kind of sigle payer system they find so distatesful in medical insurance. It's really funny, really! American political views, like many others, are influenced more by media rhetoric and culture than logic.

Basic education and medical safety nets are something everyone in civilized society has come to expect. I think this should extend to basic courses online such as MOOCs on history and other "core" curricula. The government should switch from subsidizing community colleges with professors teaching 50 students at a time and slowly shift to subsidizing online universities and MOOC initiatives. Colleges subsidized by the government should be required to invert their classroom and prepare students to learn online, instead of spending so much $$ on traditional formats from 100 years ago.

On the other hand how many doctors and lawyers do we need? We don't know. The market needs to determine this. If the government subsidizes THESE professions, it will distort the market.