Thursday, November 22, 2012
Re-introduce interest on student loans? No.
Grrr. I was just reading the TVHE blog on student loans. The basic argument is that the government should reintroduce interest on student loans and that the government shouldn't provide support for students while they study, because tertiary education is a choice.
This is the myth. Tertiary study is not a choice any more than receiving chemotherapy for cancer is. The author even points to the benefits of tertiary study, indicating that a student that completes an undergraduate degree will after 3 years of that degree be earning 51% more than those who did not obtain tertiary qualifications.
Lets unravel this. The market is demanding higher qualifications. This is part of the markets labour competitive strategy. In order for people to earn living wages, tertiary education is paramount. Sure, there are people earning decent salaries based on years experience in an industry, but they are also noting that they cannot get higher than middle management roles unless they have a tertiary qualification.
It is not correct to say that on the basis of the market conditions that people are choosing to benefit themselves through higher education. They are compelled to do so because the alternative is low waged, unskilled labour.
So what of interest on student loans? This is the biggest grind of the whole article.
Money is created as debt. If you don't believe me go search the RBNZ website and you will see reports that indicate that private banks create money out of loans. Loans are debts. The money created by private banks is not paper money or coins. Only the RBNZ is allowed to create that kind of money. Over 80% of money in NZ is created by private banks. Less than 20% is the 'real' money.
When you take out a student loan, you create new money in society. The money didn't exist until it was deposited into the bank accounts of those whom you were required to pay. And interest, well, that is the biggest deception ever. Interest is not money. It is an arbitrary figured applied to a loan amount that makes it difficult to pay the loan back. Not just because it increases the amount you owe, but because it represents an amount of money that does not actually exist. I'm not lying. The world is in a perpetual state of debt because money is created out of nothing by private banks or financial institutions and interest is a means to ensure that all the debt can never be repaid. You simply cannot pay back all the debt in the world because there is not enough money in circulation to do so. Printing more money will not solve this issue, because private banks will create more loans and therefore more interest to continually feed the cycle.
So when someone says re-introduce interest to student loans to make borrowing cheaper for the government, I say screw you dude. Students are compelled to take on substantial debt just so that they can survive in the system created to enslave them,they shouldn't be made to borrow more. To insist that students also be compelled to pay back interest on that debt, interest that is not even money borrowed and therefore not even money created, is to insist that students are easy exploitative targets and ought to therefore pay for the privilege of being screwed over by the money creating beasts known as banks.Oh, and that the government should be in on it.
Yes, TVHE are qualified economists and I am simply opinionated, but there is no conspiracy in exposing the way money is created and what interest actually is. The conspiracy is in why we were deceived for so long.