Tuesday, May 22, 2007

Student Loans Suck, Part 2

More of the same, but this time something is done about it

As readers of World know, the opinion (we're all entitled to them) here is that student loans are one of the most insidious of government programs. The kids think they are getting a deal, the extra cash thrown at the schools just increases tuition rates (2 to 3 times faster than inflation), and graduates leave facing debt they don't need, with a world of wage-slaving awaiting. Now it turns out that indeed incentives matter, as the head of student loans at Columbia U. (yes that august institution here in New York) owned stock in the lender he was "recommending" to students.

He got fired this is a good thing. The better thing would be to get rid of the government-subsidized student loan programs altogether. Ironically a Columbia Prof., Robert K. Merton, is credited with coining the terms "role model" and "unintended consequences" (though the latter I think might really belong to Carl Menger).