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Why do banks give student loans? Because they are govt backed.
"As the economy has shrunk and the cost of college has increased, financial aid has gone up as well. Between 2006-7 and 2009-10, the percentage of first-time, full-time undergraduates receiving financial aid increased from 75 percent to 85 percent at all four-year colleges." --Chronicle of Higher Ed
If there was no student loan program, it appears campuses across the country would be empty. If half of the 80% could not afford college without a loan, we would have about 7,000,000 adults looking for full time employment each year out of high school.
I think that out of that 7,000,000, many would choose to attend community colleges or vo-tech schools, which are a lot less expensive. Actually, in today's world, vo-tech schools look like a better and better value. They don't take a long time to complete, and many of them give their students an education in something that will lead to immediate employment, such as car body or mechanical repair, nurse's aide, aircraft repair, or welding. Just a couple months ago, I looked up vo-tech schools for a young man I know who has no marketable job skills. I was surprised to learn that welding can pay $30,000 to $100,000 per year, depending upon location. Very few four year degrees pay that much!
It's a problem that we've all become brainwashed into thinking that college is necessary for success, but the truth is that what is needed is perseverance in a field for which jobs are available. It really bothers me that vo-tech schools and community colleges are considered by many to be inferior to four year colleges.
I believe college tution went up as more and more student loan money became available. This began in the 70's. When I went to school I had only one loan for $750 that was a national defense student loan. 50% was forgiven for serving two years of active duty. Tution was $299 a semester flat rate when I graduated in 1974.
Unfortunately the banks have found that it's highly lucrative to deal with repossesed homes. When a home loan is defaulted on the banks continue to acrue intrest, penalties, attorney and collections fees until the property is 'auctioned' and the bank buys it from itself at the total amount owed and our government picks up the tab for the difference as a 'loss'. As the economy stabilizes and there are fewer foreclosures they need another method to keep the cash flowing. Enter the government guaranteed student loan program. Private loans that will be defaulted on, fees asessed and interest acrued - and the banks will get every penny - even after the loan goes bad.
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