Ron Paul: End student loan program

I found Ron Paul’s answer when discussing Student Loans at the GOP Michigan debate last night very interesting. And I think it warrants some discussion. So what do you think of his idea and the current system? I found myself agreeing with Ron Paul on this issue. We need to find a way to keep costs low. The student loan program has made it possible for some kids to go to college, but it has been a major culprit in soaring college prices.

PAUL: Well, I think you proved that the policy of student loans is a total failure. I mean, a trillion dollars of debt?


And it’s going to be dumped on the taxpayer? And what have they gotten? A poorer education and costs that have skyrocketed because of inflation, and they don’t have jobs. There’s nothing more dramatically failing than — than that program.

So, no, there’s no authority in the Constitution for the federal government to be dealing with education. We should get rid of the loan programs. We should get rid of the Department of Education and give tax credits, if you have to, to help people.

But the inflation is the big problem. It’s three times the rate that the government admits that inflation is, and that is natural and normal. When governments inflate the currency, it goes in the areas that the government gets involved in, housing, high prices, stock market, skyrocketing prices, medical care, skyrocketing, education…

EPPERSON: But how do they pay for it? How do they now pay for college, if they’re not…

PAUL: The way — the way you pay for cellphones and computers.


You have the marketplace there. There’s competition. Quality goes up. The price goes down. Can you imagine what it would have been like if the Department of Homeland Security was in charge of finding one person or one company to make the cellphones? I mean, it would have been a total disaster. So when the government gets involved in the delivery of any service — whether it’s education, medical care, or housing — they cause higher prices, lower quality, create bubbles, and they give us this mess that we’re in. That’s why we have to eventually get our — we have to wise up.

And look at where the bubbles come from. It’s from the Federal Reserve. And we should start by auditing the Fed, and then we should end the Fed.


24 Replies to “Ron Paul: End student loan program”

  1. Anonymous

    Paul is right.

    If the government paid for hotel rooms they would cost $1,000 a night.

    College and Medical assistance cost so much because the Government isn’t dealing with real prices. They pay whatever.

    When I get charged $250,000 for medical bills and only pay $7,000 the insurance companies are just as responsible for crazy costs.

    Deal with real money and sound policies and the market will react and stop inflating prices.

  2. /- /|/ [] /|/

    Yes, or course, he is right. When the government guarantees loans for a service, the price of the service will rise because the person providing the service knows they can charge as much as the government will guarantee.

    His further illustrations, medical care, housing, etc. are right on as well.

    More people need to pay more attention to this guy. These other moderate Republicans will just continue us down the path that we’re on. (Example – Bush = No Child Left Behind, Medicare part D, increased federal spending and debt, unfunded wars, Patriot Act, and so on…) We’re in big trouble if we don’t go the way of Ron Paul.

  3. Arrowhead

    Gingrich said the same:

    GINGRICH: You know, this is a good place to talk about the scale of change we’re about to live through. We’re at the end of the welfare state era of dependency, debt, distortion, and dishonesty.

    The student loan program began when Lyndon Johnson announced it, I think, with a $15 million program. It’s an absurdity. What does it do? It expands the ability of students to stay in college longer because they don’t see the cost. It actually means they take fewer hours per semester on average. It takes longer for them to get through school. It allows them to tolerate tuitions going up absurdly. By 2014, there will be one administrator for every teacher on college campuses in the United States.

    Now, let me give you a contrast that’s very startling. The College of the Ozarks is a work-study college. You cannot apply to it unless you need student aid, and they have no student aid.

    You have to work 20 hours a week during the year to pay tuition and books. You work 40 hours a week during the summer to pay for room and board. Ninety-two percent of the students graduate owing no debt, the eight percent who owe debt owe $5,000 because they bought a car.

    Now, that is a model so different, it will be culture shock for the students of America to learn we actually expect them to go to class, study, get out quickly, charge as little as possible, and emerge debt free by doing the right things for four years.

  4. mhs

    Student loans are only one-third of the equation that have led to soaring college costs. Second is the immense proliferation of federal research dollars. Research schools compete fiercely for faculty that can bring in big federal research dollars and have driven up salaries accordingly. Since academia thrives on misplaced notions of value, they have accordingly raised the salaries of all staff to keep things “fair” regardless of market value. Hence, an art history prof makes as much as a medical researcher with a drawer full of valuable patents (that the university owns and gets to market). The community calls this “faculty salary creep”.

    The third leg is, well, one heck of a good stock market the last 20 years that allowed endowments to grow exponentially, both through more giving and portfolio appreciation. The competition for staff and students has caused schools to focus on increasing their endowments, vs. more student aid, as a big war chest appears to add gravitas to the institution.

    1. Increase the amount of endowment that much be spent annually beyond the current 5% IRS rule. 2. Require universities to form for-profit subsidiaries for federal research grant activities that cannot be supplemented by general tuition dollars thus ending both faculty salary creep and using loan supported tuition revenues to subsidize research.

  5. Charlie Hoffman

    If we allow for a government backed low interest loan of money coming from “Who knows Where” then the GOV. beats the pants off the private sector in guaranteeing a profit on these types of loans. Either we fund EDUCATION or we don’t but we all must be in on making sure that every young person who has a desire to obtain a higher level of education than remedial K thru 12 has a way to get it.

    Two years in the United States Military serving our country and after that four years of college guaranteed would be much better spent money then sending it to kids in Afganistan who can’t speak English! 🙂

    1. Dem for house

      If we are interested in making higher education more affordable for all, we will support candidates who will end government guaranteed loans. Government backed financing only drives prices upward.

  6. Anonymous

    We are forgetting that the GOVERMENT is elected politicians. We need to remove ALL politicians every election cycle just to prove we are in charge not some elected puppet.

  7. springer

    How about this scenario. Obama had the gov’t take over the entire student loan program, so he is in control. Now he is bemoaning the cost of student loans. Next he will forgive this terrible burden on the former students. Then he goes on to a free college education for all. Europe here we come! And he doesn’t need the legislature to do this; he just issues an executive order.

    1. Job Creator

      Obama had the gov’t take over the entire student loan program…

      Which was horrible for those of us who had invested so heavily in the middleman companies that administered those loans. I got a lot of free money off of that deal. Now I have to look for another government program that I can exploit.

  8. Job Creator

    Sure Ron – paying for a university education is just like paying for a cell phone. Positive externality theory has driven much government spending here and around the developed world. The inflation he is talking about compared to other items since 1965?

    New home: 1000%
    Gasoline: 1200%
    Eggs: 100%
    Postage Stamp: 900%
    Milk: 300%
    Coffee: 2400%
    Ice Cream: 800%
    4-Door Sedan: 900%

    Military Tank: 26,500%
    Military Truck: 13,200%
    Military Fighter Aircraft: 39,700%

              1. :-(

                no it is isn’t. who thinks they are so important that people recognize their initials? I don’t know who you are and I don’t care to know someone like that.

  9. mhs

    1965 F4 Phantom $2.4 million. 2009 F22 Raptor, $150 million. Increase of 1,476%. Maybe you should take out a loan for math class Creator? 🙂

  10. Anonymous

    Wouldn’t this eliminate a very large segment of the population from ever getting a degree? Or is that the point?

    1. PlanningStudent

      You missed the point. Government back student loans drive up the costs of higher ed. If the loans weren’t available colleges would have to drop their tuition accordingly or go without the huge percentage of students using loans.

      So no you would NOT prevent or eliminate a large percentage of population from getting a degree, and it obviously isn’t the point..

  11. Anonymous

    The problem is that the politicians let it get out of hand. They had to pay off a lot of big $$$$$$$$$$$$$$ contributions so they allowed it to grow to the unbearable mess it is now in. I think it is fair to say a lot of good came out of the program and a lot of crap also came out due to poor handling……………..


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