Colleges are responsible for the house of cards they’ve become, relying on a student body reliant on government loans, which are now the taxpayers’ burden.
The government’s easy-money program has enabled colleges to simply raise tuition as costs increase instead of making the necessary cuts.
Then there are the state grants, which are heavily tied to race and ethnicity and quite costly. Easy money grants, with their high default rates, are government loans; hence, taxpayers will shoulder the losses, while colleges can continue their unabated spending.
Lending for college has become profitable and risk-free. Increasing college costs mean students must take out more loans; more loans mean more securities lenders can package and sell; more selling means lenders (soon-to-be only the government) can offer more loans to package and sell; more selling means lenders can offer more loans with the capital they’ve accrued, which means colleges can continue to raise costs.
Colleges and universities have more social programs, more athletics, more trainers, more sustainable environmental programs.” The student loan program made this possible.
It works the same way with home loans.
Bad Solutions
Obama’s solution was to shift the entire unsustainable burden of college loans, socialist-style, to the taxpayer with his Income Based Repayment, which ties the size of student loan payments to the borrower’s income. IBR allows borrowers to pay no more than 15% of their discretionary income per month toward the loan. The U.S. also forgives whatever hasn’t been paid off in 25 years.
Biden’s solution was to “forgive” the debt, placing the entire debt on the taxpayers. They need to go back to stricter limits when handing out government loans. Barack Obama transferred bank loans to the government, and it made the situation worse.
The government loan programs are here to help.
A Builder Who Graduated from Dartmouth
“I went to Dartmouth. It costs roughly $60,000 a year all in. I now build homes for a living. They cost roughly $350,000 to build. Both of these numbers are completely insane. And they are insane for the exact same reason.
“The moment the government guarantees a loan, the seller stops caring what the buyer can actually afford. College tuition exploded after the federal government started backing student loans with no underwriting and no discharge in bankruptcy. Home prices exploded after Fannie Mae and Freddie Mac started buying mortgages and removing risk from lenders.
“When a bank knows it will get paid no matter what, it will lend to anyone. When the bank will lend to anyone, the seller raises the price. When the seller raises the price, the buyer just borrows more. Nobody feels the pain until the bill comes due 10 or 30 years later.
“Colleges added $200 million rec centers and hired thousands of administrators because students were writing checks with money that didn’t feel real. Home sellers listed at $500k because they knew the bank would approve it regardless of whether the buyer could sustain the payment.
The Government Loan Business Model
“I benefited from both systems. My Dartmouth degree opened doors. The homes I build get financed by these same banks. I am not pretending to be above it. But I look at both industries from the inside and tell you they run on the same engine. A guaranteed loan that disconnects the buyer from the real cost of what they are purchasing. The university and the mortgage lender have the same business model. They are financing tools that happen to have a campus or a front door.
“If the government removed the guarantee from the student loans tomorrow, tuition would drop 40% within five years. If Fannie and Freddie disappeared, home prices would correct in the same direction. The prices are essentially fake. They are a reflection of how much debt a bank is willing to issue, not how much the product is intrinsically worth. I say this as someone who went to an expensive school and builds homes.
“Both systems are broken in the exact same way, and nobody talks about it because too many people profit from the status quo.”
I went to Dartmouth. It costs roughly $60,000 a year all in. I now build homes for a living. They cost roughly $350,000 to build.
Both of these numbers are completely insane. And they are insane for the exact same reason.
The moment the government guarantees a loan, the seller…
— foley (follard) (@follard) August 6, 2026
