Growing Pell-Mell - The government’s program to help low-income students is out of control:
There are two major problems with the program: Not only has it expanded to cover more than half of all students, but almost anyone—regardless of academic background—can qualify. Recipients must meet only a minimal academic standard: obtaining a high school diploma or the equivalent. There are no minimum SAT scores or GPAs.
Consequently, many grant recipients go to college but flunk out or lose interest, often going deep into debt at the same time.
Government Created Potentially Catastrophic Education Bubble:
Like housing, government tried to orient higher education through a social engineering lens and “established Sallie Mae in 1972 to encourage banks to loan more money for college. The Affordable Care Act of 2010 allowed the government to loan money directly to students. The following year the Taxpayer Relief Act extended tax breaks to student loan borrowers. Predictably, the Federal Reserve kept interest rates at historically low levels, making college loans cheaper.”
In the meantime, “the price of a college education soared…[and] by law, lenders cannot even deny Stafford and Perkins loans (types of federal student loans) based on the borrower’s credit or employment status. What other reason is there to deny a loan?
