By: Jeffrey Klein
Examiner.com

In addition to our economy and country being overshadowed by a $16.2 trillion national debt, and the 4th $1 trillion plus annual budget deficit this fiscal year, as revealed in my prior two articles, we are also starring down crises stemming from student loan debt, college tuition increase and stagnant unemployment in our jobless recovery.

However, in the first article of this series last Friday, I have found that these three crises are correlated, and are the direct result of Liberal social engineering through legislation, liberal indoctrination and worse–government subsidies, since the first term of the Clinton Administration from 1992 to 1996.

The magnitude of these situations are each apocalyptic, as currently, student loan debt stands at about $1 trillion, with delinquencies rising from a 4.5% low in 2005 to 8.8% in 2009, according to a September 12, 2011 release from the U.S. Department of Education and this effects online school programs as well.

Although the stagnant 9+% unemployment rate, resulting from the jobless recovery is no doubt causing the higher delinquency rate, the dollar level of the outstanding debt balance was promulgated by college tuition increases 250% greater than the inflation rate, since 1992–which ironically, were fueled by the increased student loan program funds available.

Finally, as we reported yesterday, these is a serious mis-match between jobs available and the skill set of prospective employees, a large block of whom are recent college graduates, whose degrees have little or no commercial viability in the contemporary marketplace–but yet, they were allowed student loan funding.

Sweeping changes are necessary in the student loan program, because it is the availability of those increasing hundreds of billions dollars per year, delivered through ill-designed programs, which under the Obama administration were taken out of the hands of commercial banks and absorbed into the ever growing federal government.

1. Change of program management: Return program administration to the private sector commercial banking industry. Their local market direct customer service coverage, technology, profit-driven orientation and skill sets are more conducive to proper management, versus the decentralized, and obviously politicized federal government.

2. Change of underwriting doctrine: Underwriting will now not only consider the borrower (and family), but more importantly, the curriculums, by introducing a “loan to value proposition,” according to the intended career path. The combination of ineffective career counseling and evidently no such oversight by the student loan program, may well have resulted in a “lost generation” of graduates, causing the “structural unemployment” condition we have today.

Under this concept student loans would be available according to the expected future job growth in a career sector, as well as limiting the total amount (cost of degree) of the loan, to coincide with the expected income from the chosen career to repay the loan over a modest time period.

This would be similar to underwriting the lease on a car, where “high value retention” cars have lower monthly payments–but, which payment maximum amount is still limited by some [prudent] percentage of the income of the borrower.

For example, in the case of the fastest growing fields, such as healthcare, engineering bioscience and computer technology is, and will continue to be, very high demand and growing fields, then there would be 100% funding available for every such career within that field of study. From there, each “career” would be “scored” lower according to comparative demand and growth rate.

Finally, there would be no government student loan funding available for declining demand fields, such as journalism, editors, law, general management and advertising. A excellent example of this would be the Occupy Wall Street young lady from my article yesterday.

The net result of these strategic changes would be to immediately promote education in fields of high demand and job growth, particularly manufacturing and building trades–and discourage financially non-viable study areas. Students may still pursue such a degree, at any given school–but not with taxpayer guaranteed student loans.

3. Reduction in Maximum Loan Amounts Available: In order to stem the tide of these stellar tuition hikes and, the maximum loan amount available will be reduced year-to-year, on a systematic basis, much like we have already been doing with Medicare and Medicaid providers, and will be based on the cost of the average public university cost.

The objective will be to bring the cost of higher education back into retro-equilibrium with inflation over the next three to five years–so that our students and parents are not facing another doubling of costs by 2015, because they can’t afford it, and neither can the already stretched student loan program.

If any student is fortunate enough to be accepted to a private school, generally their parents are financially equipped to handle the responsibility. But, if not, most private and “Ivy League” schools have massive endowment programs that provide scholarships and other preferential student financial aid.

Parents and students should view it as a privilege that the United States taxpayer is even willing to facilitate financing a good, solid education–but we are not going to engage in any more Liberal social engineering experiments.

In fact, we desperately need to “neutralize” the Liberal “socialist indoctrination mechanism” from every level of all public education institutions–as soon as possible.

Copyright (c) 2012 by Jeffrey Klein

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