Tuesday, December 21, 2010

The Educators Are The Ones Needing Education (Part 3)

You didn't think the multi-part series on financing education would end with an endorsement of school vouchers, did you?  There actually exists an even better "Marko's Take" solution.

To get up to speed on the issues of financing public and private education, the prior two blogs can be accessed here:  http://markostake.blogspot.com/2010/12/educators-are-ones-needing-education.html.

If we all agree that an educated society is in everyone's best interest, then the only issue is how to finance it.  Just a few of the key economic benefits of a better educated populace include higher employability, income,  productivity with a much lower crime rate and dependence on the public dole.

We can take this logic much further.  If I earn an additional $1 million lifetime dollars as the result of public generosity, than wouldn't it be much FAIRER if I SHARED some of that with the people who financed me as I actually earn it?   Of that extra cool mill I just made, why not pay as I go as long as I earn?  This can be done through a small income tax surcharge which is earmarked specifically for future students.

This plan would also accomplish eliminating all the dead-beats who borrow and NEVER pay the loans back.  According to recent data from the Department of Education, student loan default rates are soaring:  http://www.ed.gov/news/press-releases/student-loan-default-rates-increase-0.

The stated default rate is actually believed to be much, much higher than the 7% official rate.  Many firms have been set up to keep a defaulting student from officially being characterized as such to protect credit scores and bank balance sheets. 

The really sad thing about student defaults is that the majority have the capacity to actually pay the loan back but rationalize non-payment because it's government-guaranteed and little enforcement mechanism exists. 

The IRS, I think we'd all agree, is far better at collecting debts than the Department of Education.  But, another solution would be to use the present value of loans to offset future Social Security liabilities.  The thought here would be to eliminate future public liabilities in exchange for funding some level of education.  A higher income earner would certainly have a greater capacity to actually SAVE for retirement!

Now how simple would this be?

For more on the Social Security system, we have two videos which explain the system itself, as well as a "Marko's Take" solution.  They can be viewed here:  http://www.youtube.com/markostaketv#p/u/3/twFn9XyP2rI and here: http://www.youtube.com/markostaketv#p/u/2/7Rl6XtobFpE.

Marko's Take

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