Student Loans; Starts Your Dependency

Posted by on October 27, 2011 11:09 pm
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Categories: The Nation

LEE’S SUMMIT, October 27, 2011 – In 1981 I graduated college with a Bachelor of Science in Mechanical Engineering, and had outstanding loans of nearly eight thousand dollars.  During college I worked selling paneling, Sears fences, door-to-door fire detector sales, and I drove a taxi cab.  I roomed at an 8 bed fraternity house and did anything I could to stay in school and learn engineering.  When I graduated I was stunned by the incredible amount of money I owed.

My last year in college I started to work as a draftsman and upon graduation I was given the job of a Process Engineer making magnet wire: I started to pay back my loans.  The day I paid my last loan payment my home mortgage was still over ten percent, but it was coming down from the peak of almost twelve percent.  I celebrated by taking my diploma, finding a nice wooden frame, and placing it inside knowing I now owned my education.

Today I read a piece where President Obama is encouraging college students to think of Civil Service as a way to reduce their payment amount on their loans.  If a student takes on the average education cost $60,000 for four years in a public institution, most of it on loans they can end up owing upwards of $40,000.  That is a far cry higher than my own college loan.

In an economy that barely produces enough jobs to keep the unemployment rate at just over 9% officially and closer to 17% realistically the prospects of getting a job that pays more than $20,000 to $25,000 is rather low – unless of course you graduate high in your class and picked a career that will pay you well.  Remember that when people talk about averages 50% are above it, and 50% are below it – that’s simple mathematics.

The point is that at least 50% of the graduating classes will be below the average pay for a 4 year degreed individual so the likelihood is that at least 50% will be in the $25,000 a year or less category working in unrelated fields just to make ends meet.  Not a great prospect.

In view of the mathematics 50% will either earn low wages or take President Obama up on the proposal to join Civil Service and limit their payments (for simplicity I’ll use a salary of $25,000 a year) to roughly a bit over $1,400 a year.  At no interest (if it was that easy) they would pay back their $40,000 loans in 28 years (or by the time they reach age 50).  But the program limits the payback time to 20 years so they only pay back $28,000 of the $40,000 they owe and leave the rest to the Government.

Student Loan Trend Compared to Number of Students in College

Not everyone will remain at the low wages for the full time – I hope – but the scenario is there for the government to be stuck with a large portion of the debt.  President Obama said that it “won’t cost taxpayers a dime” and his Domestic Policy adviser explained to The Washington Post that “the program will not cost taxpayers anything because the administration plans to use savings from the elimination of loan subsidies to pay for the reduction on interest rates on loans that are consolidated.

I’m a bit skeptical about that statement based on the efficiency and profitability of Amtrak, the promise that the CLASS act was going to fund itself and part of ObamaCare (recently eliminated because it could not pay for itself), the ever increasing cost to mail a letter and the profitability of the Post Office, and all the other Government programs that are poorly managed, and steeped in waste and fraud.

Confucius taught the Chinese Emperors that to rule effectively in a totalitarian society of his time, the best and most educated people should be part of Civil Service.  Obama is appealing to the bottom 50 percent – those who can’t find jobs in the lackluster economy – to shirk their responsibilities and go to work for the Government.

Not only should we re-evaluate the K-12 education system in the United States, but we should also evaluate the totality of the educational need of Americans.  A college education is only one of the tools used to forge the Middle Class: It is not the ONLY tool.

Desire, drive, vision, motivation, intelligence and the Will to do what is needed comes first.  Once you KNOW what you are willing to do to achieve your personal goals, then you need to have the paths before you that will give you the opportunity to prove yourself and succeed.

In 2009 there were 20 million under and post graduate students.  Every year one fourth of that number or 5 million graduate.  If 50% of them are below the average wage for a college graduate that means that every year 2.5 million will consider Obama’s proposal, and if only half of them take him up on it that’s 1.2 million loans, per year, that won’t be paid in full (20 years down the road): that’s 3.3 billion dollars added to the national burden on Tax Payers – just to pay for under-performing students college degrees that are 20 year out of date.

Getting my acceptance letter from my college was a significant achievement for an immigrant boy who had the dream.  My parents could not afford to help me much, and that was OK, they had made it possible for me to be in the United States so I could have a better life.

Some may say that I’m lucky to do what I do, and to be here in America.  Some may say that I’m lucky not to be back in Argentina.  Some may say that I’m lucky to have the job I have.  To them I say what I was told in my first few years out of school: luck has two components.  The first is preparation (or perspiration) and the other is opportunity.  If you are not prepared, no matter what your opportunities are, you’ll never make the most of the.

The Obama Student Loan Forgiveness plan, while fully well intentioned, takes away personal responsibility, promotes mediocrity, and burdens our grandchildren with debt that had no productive purpose.  It promotes the opposite of INDEPENDENCE, it promotes dependency – and that’s just simply un-American.

Respectfully Submitted,
The Lee’s Summit Conservative