Ron Paul: The Truth About My Student Loan Program

7:46 AM, Oct 28, 2011   |    comments
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By Ron Paul for USA Today -- Anytime someone dares to seriously address the major problems posed to us by a government program, many in the news media accuse that person of wanting to hurt citizens in a reckless manner.

Though everyone knows Social Security has major solvency issues, simply trying to save the program for those who rely on it, or finding better solutions for younger Americans, is portrayed as somehow attacking Social Security.

Though everyone knows Medicare is rife with major difficulties, trying to protect it for those promised particular services by offering a different approach is portrayed as attacking Medicare.

The demagoguery makes solving our problems even harder.

My "Restore America" budget plan would eliminate five federal departments, including the Department of Education. But the aspect of that department that deals with student loans isn't eliminated - it's simply handled elsewhere in the budget. Yet the many headlines that came out after my interview Sunday on Meet the Press exclaimed that I wanted to "end" or "phase out" all student loans. In the long term - just like Social Security for people under the age of 25 - this is technically true. But to portray my budget plan as immediately getting rid of student loans is simply dishonest.

Transitioning to a better system

When host David Gregory asked me whether or not we should abolish federal aid for education, I replied: "Eventually, but my program doesn't do it; there's a transition in this." To read many of the headlines this week concerning my budget plan and student loans, you would think there was no transition.

The accumulated total student loan debt in this country is over $1 trillion.

Think about that for a moment.

Our entire national deficit for this year is $1.5 trillion, and the cost of college education alone is two-thirds of our country's entire budget shortfall.

This is staggering.

When you also consider the state of the economy - that there are few jobs for graduates, that the actual quality of education our young people pay through the nose for has eroded, and that countless Americans are now slaves to massive debt simply for trying to get a college education - the notion that the status quo must hold is unconscionable.

Like housing and medicine, education costs went through the roof when government became involved. In the last three decades, the overall inflation rate has increased more than 100%, which means we basically pay double now for everything we buy. This price inflation is an inevitable consequence of printing money out of thin air and devaluing our dollar. But compare this inflation to the rise in the cost of college tuition, which has increased almost 500% in the same amount of time.

This is what happens when we print money out of thin air and couple it with government intervention in education.

When I went to school, we didn't have a federal student loan program, and I was able to work my way through college and medical school because it wasn't so expensive. What has changed? In the name of "helping" students through federal loans, the government has really hurt them in the long run by drastically driving up the overall cost of education and forcing poor and middle class Americans, who are just trying to better their lives, to take on unreasonable debt.

And look what that has given us. Our young people are jobless and saddled with student debt greater than all of the credit card debt of every American combined!

What I plan to do

My budget plan cuts $1 trillion of excessive spending in year one. This is a first major step in getting big government off our backs and allowing the free market to work.

In my budget, Social Security, Medicare, - and yes, student loans - are not cut in any way for those currently receiving such services or for those who will be in the near future. Our economy is not healthy enough, nor are most Americans in a financial position at the moment, for any of these programs to be significantly altered now. But perhaps after balancing our budget during my presidency, reining in the government and easing the regulatory burden placed on the taxpayers - which will result in a more robust economy and new jobs - the price of education and other services will decline because of more free market competition and less government interference. Then, and only then, will we be able to address whether some of these programs are the best way to care for people.

I want to help our students, but I believe we will assist them the most by eventually transitioning student aid away from the inefficient and ineffective federal government and back to local governments and private market-based solutions - which simply work better.

Getting the federal government out of the way will give us better educational opportunities at a better price. The notion that I am somehow "anti-education" is absurd.

Centralized government planning is the main cause of so many of the challenges we face, and removing that obstacle is the primary way to ultimately fix education in the long term. The sooner we resolve these problems the better, of course, but it is never too soon and certainly never at the expense of Americans' best short-term interests to take serious action now.

As we close in on a $15 trillion national debt, we must start such a government-to-free-market transition right away, and this is certainly something that can be accomplished without harming the average American in the process.

But constantly frightening Americans anytime someone dares to offer serious solutions is the easiest way to make sure there is never any transition, never any real reform, and never any recovery.

Rep. Ron Paul of Texas is seeking the Republican presidential nomination.

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