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FBN’s Gerri Willis on why Obama’s effort to make student loans easier may actually hurt college students.
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-- -- bailout alerts the Obama administration has decided it's time to spread the wealth some more.
Just in time for the election.
And who's getting at this time.
Broke college grads Obama's team wants these borrowers to be able to wipe out their private student loans through bankruptcy.
Again the administration is forgetting there's no such thing as a free lunch if -- know their risk is higher they'll raise rates making college more expensive.
Of course the president wants to ignore the real crisis which is the government's own loan program.
Uncle Sam that's you and -- other taxpayers.
Back more than 90% of student loans nearly 900 billion dollars worth.
Don't get too attached to that money though the White House's own budget forecast as many as 25%.
The federal loans issued next here.
Will end up in default.
25%.
A private banker would never take on that risk.
And that means defaults could cost as much as twenty billion dollars that's a program in dire need to perform.
Look the crucial point the president just doesn't seem to get is -- Making student loans easier to get only ends up hurting these kids.
When the money -- -- get schools are -- jacked up prices it needs students end up with massive debt they'll have to work to pay off for decades.
And that's if they can't get work.
I guess the president thinks bankruptcy is a cure all.
Here's some perspective.
In the last many years tuition costs have risen a 184%.
That's adjusted for inflation by the way but the pay have college grads has only risen by 9%.
What -- education industry's favorite stats has been a college grads will make a million dollars more in their lifetimes and folks with just a high school degree.
But recent studies are showing that's no longer true today -- degree means your lifetime earnings will go up by 300 to 600000.
Dollars.
On average that works out to be less than a four and a half percent return on your investment ROY you know that number.
That's bad but a degree just isn't -- a ticket to break away success like it used to be.
Now despite this more more students sign up every year and many of them won't even be prepared for a job.
A study finds half the graduates of four year colleges.
Don't have basic reading and math skills like the ability -- understand a credit card offer an editorial from the newspaper.
For far too many grads that diploma is just proof of debt not -- ability.
But there is hope for a solution last year the University of the South a private school cut its tuition and fees by 10%.
And it's paid -- they've gotten a huge boost in applications and the quality of applicants improved to.
A Latin school the B Morse -- selected.
So schools are capable of holding down costs and providing better value.
The last thing we need is more government interference making it easier for students to write up of mountain of debt.
They can afford piling more risk on the taxpayers back.
But I'm afraid people just won't listen to reason.
Look even guy who research this segment is leaving his steady job very is right there Alex -- to go back to school.
And ran up his own mountain of debt.
He will be next Alex -- we appreciate your hard work thank you pick back up.
He's a good guy.
