The Student Loan Crisis Sanders Can't Solve
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Politics and Activism

The Student Loan Crisis Sanders Can't Solve

Government can't fix the problem it created.

The Student Loan Crisis Sanders Can't Solve

Many aspects seem appealing about the senator and presidential candidate Bernie Sanders (I-VT), but the one I hear the most is his plan to make public university free and allow for students to refinance student loans. The six-point plan on his campaign website has a myriad of issues that result in an economic nightmare. Here I stole each point’s title directly from the Sander’s campaign and below each I slowly unravel his socialist dream, and by that I mean delusion.

1. Make tuition free at public colleges and universities.

In this first section, Sanders praises Germany for its recent move to free state university for all students. Yet dig deeper and you will see this is not the dream we have all been hoping would come true, but instead the nightmare we want to wake up from. In 2014, International enrollment hit its record high in Germany, which isn’t helping when already about 400,000 students are flooding back into the halls of German universities each year that only accommodate 230,000 in residential living. Not to mention the colleges now lack the funds to hire more professors and build more classrooms. Which has lead to sites like this image from Johann Wolfgang Goethe-University. College students sitting on the stairs at the top of a massive lecture hall. Where they likely could have heard as well if they were in the nosebleed section of a sports stadium and the professor was on the field below.

2. Stop the federal government from making a profit on student loans. 3.Substantially cut student loan interest rates. 4. Allow Americans to refinance student loans at today's low-interest rates.

According to Sanders, the federal government is going to make $110 billion (and take into mind that this is for slightly under one trillion dollars in outstanding loans) profit off of student loans in the coming year. Now I haven’t fact checked that number but let's grant Sanders that he is correct. Regardless, be it a private bank or the federal government when giving a loan out a profit will always have to be made. When loan interest rates are formed taken into account are delayed consumption and inflation. A profit must be made instead of neutral returns because money on average inflates over time meaning that $10,000 of todays might actually be equal to $10,500 worth four years from now so that must be adjusted for.

Also by giving out loans the government (the tax payers) are delaying consumption, they do this because a delayed consumption of resources implies a positive return in compensation at a later date. Otherwise why even loan out the money in the first place if you are just going to get the same amount back later but have to wait all that time to spend it? That’s right, they wouldn’t. If that were the case private banks or the government would have no incentive to loan out money, and if they had to continue to do so because of a government mandate they would be doing so at a loss deep in the red. So you can’t just willy-nilly get mad at profits or arbitrarily cut interest rates, they exist for a reason. Yet anyone could learn this in a basic economics class, except Bernie who probably slept through his.

5. Allow students to use need-based financial aid and work study programs to make college debt free.

I don’t even understand why Sanders made this a separate point if point one was to make all public university free for everyone, maybe he’s referring to private universities but if so he doesn’t state that. Yet, then again nothing else he does makes sense so why should this.

6. Fully paid for by imposing a tax on wall street speculators.

Oh yes, more taxes, exactly what America needs! It sounds so great to tax those meanies on Wall Street doesn’t it? Those monopoly men sitting on piles of gold coins with moneybags in their hands bursting at the seams… That’s a nice picture isn’t it? Well, sadly it isn’t true. It’s you they will be screwing over. You know those IRA accounts that I know my parents have, and bet many of your also very middle-class parents have? Well, most of those contain at least some percentage of tradable stocks and mutual funds. Which means you and other middle-class families would be the ones really hit up under this new tax.

7. Reality

Ok, I’ll admit this isn’t one of Bernie Sanders point titles but remember this: In 2016 Republicans are looking to remain in control of at least the House of Representatives. So even if this plan was perfect and without fault it would have about a snowball's chance in hell for at least the first two years of a Sanders Presidency, and by 2018 who knows what could happen? This promise could be Obama’s Guantanamo Bay.

So please take a moment to reevaluate Sander’s, because as the old adage goes, “If it seems too good to be true, it probably is.”

Don't misjudge me. Like I said before, I come from a middle-class family myself and paying for school isn't something that is exactly the easiest thing in the world for us. Trust me, I have my own skin in the game and want to see things changed too. At this point, it seems as if I have ended with nothing but a torn up policy, and with nothing left to fix what is a broken system. Yet that is not so. Free market education policy is the best way to solve cost issues, not a perpetual cycle of government loans and subsidies that aren't halting increasing costs.

Free markets have made everything from cellphones, cars, T.V’s, etc. drastically cheaper over time opening up all these once upper-class goods to middle-class ownership. If we give it a chance it could work for college too.

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This article has not been reviewed by Odyssey HQ and solely reflects the ideas and opinions of the creator.

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