Seven Year Limit on All Student Loans

In the bailout package being debated and soon to be passed, congress is discussing adding student loan and grant provisions as this article from the Union Leader highlights.

We are definitely in favor of increased government grants for students - especially for high achievers and socioeconomically disadvantaged students who have shown elements of success through their adversity.

However, we think too many loans are part of the problem. Government loans are better, as long as we keep the interest rates low and fixed. Private loans have been a disaster. Most have variable interest rates, and the bankers (the same ones who are being bailed out and buying $35,000 commodes) changed the law in 2005 so that private loans can never be discharged.

This private loan money has vastly increased the cost of colleges, as the universities realized that they could increase tuition 10%+ a year for decades, and larger loans would always be offered to the students.

The students had a choice - pay outrageous fees, or not be educated.

We think that there should be a seven year limit on the repayment period of student loans. If the loan cannot be re-payed in seven years, the private loan balance is forgiven, and the bank takes the loss.

The private loans will quickly be limited, and the colleges will be forced to cut costs to attract students. Maybe the $100 million dollar recreation center was a gratuitous want, not a educational need.