Am I Wrong?
Last night in the State of the Union Address Obama mentioned, “To make college more affordable, this bill will finally end the unwarranted taxpayer subsidies that go to banks for student loans. Instead, let’s take that money and give families a $10,000 tax credit for four years of college and increase Pell Grants.” When Brandon told me about this I immediately shook my head and said, “psh.” If we take away a banks subsidies for student loans, then where is their incentive to give out said loans? They already have to charge a lower interest rate for student loans, also the repayment rate for student loans is lower (meaning that many people default on these loans). If I was in the banking industry, I wouldn’t be too gung ho about passing out those loans and even less so now that I don’t get any kind of incentive for it. If the banks aren’t granting student loans then where are students going to get the money to pay for college? $10,000 in tax payer credit isn’t going to cover even a year of school at Harvard, and will only cover 2 years at a school like the University of Utah. If high school graduates aren’t attending college because they cant afford it, then they aren’t entering the “white collar” work force. Which means in a decade or two, when people are retiring there will be no one educated enough to fill those positions. Which in turn will be a detriment to the economy. Am I wrong?