Peter Schiff: Why government guaranteed student loans are a terrible idea. (Part 1)

Peter Schiff talks with a college graduate that has nearly $200,000 in student loan debt because of the government.

This should be a blatantly clear example of why the government needs to get the hell out of the education sector.

http://www.schiffradio.com/
http://twohundredthou.com/

Category:

News & Politics

Tags:

• peter
• schiff
• government
• free
• market
• student
• loans

[voogru]

@omarsalem91 If the government did not guarantee the loans, the students would not be able to go to the colleges, the colleges would be EMPTY until they reduce the prices.

Right now there is no downward force on prices. They could literally ask for 1 million dollars a year to go to college and the kids would still get the loans because the government will always guarantee the loan even if the student doesnt pay it off.

[voogru]

@kommisar Absolutely.

You should also take into account how many people have successful careers, but their degree that they spent a fortune on has nothing to do with their career.

They just wasted a fortune.

[xMaXiMuSx]

@fasloc

nonsense.. You're missing the point.. goverment guarantee loans is why it's so expensive.. if you abolish the loans, tutions prices collapse.

[fasloc]

Ol' Peter wants a barrier between rich and poor. The best way to do that is to make education accessible to those that can pay out of pocket. Keeps people in their place.

[rwoz]

@voogru I agree with you there, Im a Ron Paul supporter so. Anyway.,.. Im not going to argue if it is you or me who know this thing best, Im not an economist... this is just a hobby for me so I havent studied these things up close.

[voogru]

@rwoz Any time the government interferes with a market, prices skyrocket. Look at how ethanol subsidies caused corn prices to go up. The value of farmland suitable for corn skyrocketed as well.

Kids are told today that 'education' is the 'best' investment and that they'll be on easy street once they have a degree.

I'm not quite sure how to put it.

Would you like to make $100,000 a year, or $250,000 for doing the same job?

Would you ever pick the $100,000 a year?

[rwoz]

@voogru But is housing really the same thing? People didnt care as much since the common belief was that the prices would always rise, so they saw it more or less like an investment. I dont think people would reason the same way with college.

[voogru]

@rwoz But there is no incentive for the schools to do that. You have to understand that people will always do what makes the most money. Whenever the government gets involved like that, the market gets rigged. Look at how housing prices exploded when anything with a pulse could get a loan.

[rwoz]

@voogru I agree that government can maintain cartels, but is it so in this case? They have an incentive to lower costs since students dont want to get into debt. Thats just pure logic, the students dont want to owe someone a lot of money, even if its interest free. So if someone lower their tuition fee, more students will go to that school, and that school will earn more money. Simple as that, I think Peter Schiff would agree on that too...

[voogru]

@rwoz Cartels can hold on forever when they are assisted by the government, it's the only way a cartel can maintain a stranglehold on the market. There is no incentive to lower prices, because it doesn't matter what they charge, students can always borrow the money.

Once thats no longer the case you would see them cut prices, reduce costs, and compete.

[rwoz]

@voogru I think you are wrong... it sounds like you assume the schools are in some kind of a cartel where the schools prop up the prices to a artificially high level. From what I have heard from free market economists, cartels cant hold on forever. Even though every school benefits from the high revenues, they still have the incentive to take students from other schools by lowering the tuition a little bit. This in turn should make the other schools do the same.

[voogru]

@rwoz That's just one piece of the puzzle though.