Student Loan Solutions: Bank Loans and Fair Tax


Student Loan Solutions: Bank Loans and Fair Tax


Below is link for a Ted Hruzd letter that the Daily Record published Jan 31, 2013.  It received 21 on-line recommendations as of Feb3.  Hence, for a small local paper this is encouraging that a fair number of the electorate may be interested in both serious tax and entitlement reform.  Below the link is Ted’s letter and also some of Ted’s on-line responses.


Please Join the debate.



the letter:


This is a response to the recent editorial regarding tuition increases. Please, no more studies are warranted. Just look at the recent study by Center for College Affordability and Productivity. One conclusion is that 48 percent — or 13 million college graduates — hold jobs that do not require a bachelors degree. This is latest example of how federal subsidies created a massive higher education bubble.

Meanwhile a Deloitte study last year reported that as many as 600,000 manufacturing jobs are not filled due to lack of skilled workers.

The answer is for the government to get out of education loans. Let banks choose who to invest in. Competent banks will provide loans to a low-income prospect aspiring to be an engineer with strong math SAT scores. Banks conduct returns on investment analysis. The government does not and instead raids taxpayers.

The government can go one step further and replace the archaic tax system with the Fair Tax, a bill in Congress as HR25. It eliminates all deductions, personal income and corporate and payroll taxes and replaces that with a consumption tax. By allowing one to keep all of their paycheck one is then able to make most responsible decisions for themselves and fund them.

With government education tuition monopoly out of the way, more will adapt to market demands in order to best utilize their investments. That could mean opting for skills that can lead to manufacturing jobs. Right now there are too many incentives to take government loans, take easy courses in college, wind up with low-paying job, and tens of thousands of debt which may ultimately become a taxpayer bailout.

Some of Ted’s responses:



The US government on multiple fronts is bankrupting our economy. Our total debt is up $5.8 Trillion from $10.6 Trillion to $16.4 Trillion over past 4 years. The Fed has printed over $2 Trillion over this time in large part to purchase our debt at rates that more more and more creditors walk away from. All this stimulus and Q4 GDP contracted. Now who is going to eventually bailout majority of the $1 Trillion in student debt? High time for the US to adhere to laws of economics. It is better we restructure our debt. Else Arab sheiks, Chinese finance ministers, and IMF accountants will and more harshly if we continue this fiscal and monetary madness. Time permitting I respond to civil comments.



I argue for replacement of gov tuition monopoly with private banks and impact of Fair Tax. I stand by with all points in my letter. My comments about debt are to stress the dangers of debt from multiple fronts and that includes the college tuition debt bubble which may explode in a year or 2.



To those still arguing for raiding taxpayer $ …
Banks ask for collateral. They must stay in business. It takes hard work for private banks and businesses to stay in the black. Banks want to generate profits and look for opportunities. Young bright prospective students offer such opportunities. Contrast this with proliferate and lax loan standards by the gov. Majority of $1 trillion student debt will never be repaid. Taxpayers on the hook again. Furthermore too many of the $900 billion of annual corporate and private fed tax deductions likely detract from GDP growth. Again tax reform via Fair Tax addresses this eliminating these dubious deductions. Providing more in our paycheck a allows us to responsibly plan our core investments such as college if that is our choice. Time permitting I respond to civil comments.



To those ignorant of the laws of economics ….
Return student loans back to private sector else continue tuition increases due to too many dollars chasing same supply – laws of economics …. Read more Again I respond only to civil comments, time permitting.


And interesting observation from one commentator very familiar with the Fair Tax:


Very nice, Ted! Worthy students should be able to attend collect, but government loans to everybody push up demand. Colleges respond with price increases. Education is subject to the same market forces as any other endeavor. If colleges have to compete for scarcer dollars, they adapt and offer more focused education for less.



Twitter @Economics501

About economics501

1 - free market Capitalist; 2 - Fitness Entrepreneur; 56 years old, VP at an Investment Bank in NYC, ex Venture Capitalist, happily married with 2 girls. Education: Rutgers and NYU. I allow Ted Hruzd, my friend to blog at will here. He has many posts here. I have known Ted since we were both students at NYU. Ted also works for an Investment Bank as a VP in Equity Global Markets. ------------------------- I was very very Socialist leaning as a 22 year old. I then strongly believed in Gov role in helping the poor. However, as a USDA Child Nutrition Programs, I personally accounted for millions of fraud, abuse, and waste of tax payer money. I came to believe that the poor would be best served with less Gov programs and more with direct aid via tax system. Then after 5 years I became a free market capitalist, was a venture capitalist in 2007 and helped start 2 high tech companies. I dedicate this site to champion free market capitalism as the best road to Prosperity. Please join in. If you disagree, fine, but please post with dignity and class and be civil. Argue with facts always.
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