Govt has made education expensive in the US, Peter Schiff on Joe Rogan show
It’s high time that the US government stayed away from higher studies and stopped handing out student loans for votes, as this financial aid system has only created an incentive for colleges to make education expensive, says Peter Schiff.
Apparently setting the tone for presidential elections later this year, the leading US financial commentator stirred up the decades-old debate on the desirability of subsidies in higher education for political benefits in a recent podcast interview with Joe Rogan.
According to Schiff, the students are also getting ripped off due to the government subsidy and “are getting indoctrinated and not educated”. “They are being saddled with a mountain of debt,” he said.
Schiff said the problem primarily started in the 1990s with the government coming into the education sector and creating an incentive for banks to make loans available to teens and youths with no assets and no credit history.
“As soon as these colleges saw that the kids had access to all this money, they started jacking up prices, and then of course the universities started competing who’s got the best gymnasium and then everything became bloated and they kept raising their prices.
“Then in order to get the votes of the students, the government kept raising the limits on how much loans they would guarantee.
So, it became this self-perpetuating cycle where the more money the government guaranteed that the students can borrow, the more the colleges could charge in tuition, and so tuition kept skyrocketing,” he said.
“Right now, the government has actually taken over. They don’t just guarantee student loans, they loan directly to the students. If there were no student loans at all, the colleges would need to cut costs to get customers”
According to the CEO of Euro Pacific Capital, higher education is a racket in the US and the government is to be blamed for the same, “as without the student loans, tuition fees would have come down”.
“Right now, the government has actually taken over. They don’t just guarantee student loans, they loan directly to the students. If there were no student loans at all, the colleges would need to cut costs to get customers,” Schiff said on the show.
The financial expert says this government intervention has created a gigantic bubble in higher education.
“The government actually did two things—they made a college degree very expensive and then they made it practically worthless as now since everybody goes to college because they get the money, everybody’s got a college degree.
“So now you got to get a master’s degree or a PhD… so much time it benefits the bureaucracy, it doesn’t benefit the kids. This is a gigantic bubble in higher education,” Schiff said.
The investment broker also came down heavily on universities that prefer to hire professors, especially when it comes to economics or some of the political science, people who have worked for the government.
“These colleges and universities want to see some of their professors go to the government and then come back and the only economists that will get a government job are the Keynesian economists who want to pretend that the government can actually help the economy,” he said.
According to Schiff, the government should stay away from the economy. “There is no role in government for a free market. Let the market function,” he said.