Little moral dilemma: student grants/financial aid

I'm going back to school and I'm not sure whether I want the help of the government, even if I actually pay into those funds. I'd like the pride of being able to say I made it on my own, but that's a pricy chunk of pride.

Any thoughts? Anyone had the same decision?

Post 1

Wednesday, August 8, 2007 - 4:41pm

Rand wrote an essay about that you can find in "The Voice of Reason" which is a collection of essays from Rand and Peikoff. I don't recall exactly what her views were on that.

Post 2

Wednesday, August 8, 2007 - 4:43pm

Do you have parents or grandparents, and did they pay taxes? Accept any grants if you are legally entitled to them.

Do not take any government loans without the most grave reservations. The laws regarding paying them back are even more onerous than those regarding personal bankruptcy. Should you find yourself unable to repay the loans you will not be able to escape the debt even if you legitimately declare bankruptcy. I know too many people who accepted student loans but who did not plan to enter jobs remunerative enough to repay those loans. They were never counselled as to how this might effect them. Or they never got the jobs they expected. They are now approaching 40 years of age with tens upon tens of thousands of dollars in debt, even if they are considered otherwise financially well-off.

Ted

John, Rand said it is acceptable to take government aid, but not to vote for it or advocate it.

(Edited by Ted Keer on 8/08, 4:46pm)

Post 3

Thursday, August 9, 2007 - 12:52am

Ted is right about the loans -- they carry a heavy price indeed, particularly if the individual isn't absolutely prepared for the responsibility of repaying them. And, yes, I'm speaking from personal experience as well as from personal knowledge of those who were unprepared.

I would suggest one more thing:

There are grants out there that are simply ridiculous. Prior to going to college, my mom purchased me a "grant" book with the intent of helping me explore my options to fund my college education. One of the grants was for people who are left-handed! This is simply one example, but many of the grants were similar in nature. I threw the book away.

My personal standard was that either I earned a scholarship (via grades, essay submissions, etc.) or I took a loan (with the full knowledge that I would have to repay it). I ended up owing a great deal of money, but that was so much better than selling my standards.

Good luck!

Post 4

Thursday, August 9, 2007 - 1:29am

I went to school on a full merit scholarship, hated school, worked full time while at University, and ended up dropping out 20 credits short of my degree. I went back 8 years later after the company I worked for went bankrupt and my sister died and my boyfriend was murdered. At that point I was a little more focused on school and actually enjoyed it.

I don't see why passing up grants makes the experience more valuable. Universities overcharge by incredible amounts, largely based on the assumption that one will be over-subsidized anyway.

Because I originally worked through school, classes seemed unreal to me. But I don't have a heavy burden now.

I would say accept any grants without insulting terms and if you wish, pay them back after you graduate.

Ted Keer

Post 5

Thursday, August 9, 2007 - 1:48pm

To clarify on the point of loans, yes you can't default them. No, they're not government owned, they're owned by a private company, usually Sallie Mae or US Bank or some other exclusive student loan company, although local banks can get in on it too. None the less, the rules for repaying them can be a pain in the backside, and I got a bit to repay myself, but I doubt it will be that bad considering I have little interest in getting the two-car, kids, and house plus dog "American Dream." It's only a problem if you know that you're going to get more stuff than you need (the kids, the cars, the house, and the dog...). And, the plus is this: you can shuffle the debt about if you want to, even at your risk. Why migh this be a benefit, say you want to put all the payments into one bank or loan company, it might just be sound to do so if they give you a better rate and allow you to put a percentage of the payment to principle. And it may make it easier to track the expected time for it to be paid.

None the less, I warn any student to avoid unneeded loans. Only take what you need. If it's books, some universities will let you check the textbooks out from the library for free. If it's lab equipment, see if you can find a professor willing to give you some old, but acceptable equipment or share with a friend it doesn't require a separate workbook (as some chemistry labs and what not require). Also, when push comes to shove, sometimes going part time to university is better than diving straight into debt, unless you plan to be an medical doctor or lawyer, this route may save you from some debt and stress in the long run.

-- Brede

Post 6

Friday, August 10, 2007 - 8:46am

Not taking government funds to which you are legitimately entitled is akin to being forced to pay for insurance, and when circumstances arise, you refuse to make a claim.

When you are criticized for taking advantage of government programs by those who know of your principles it just adds insult to injury.

Sam

Post 7

Friday, August 10, 2007 - 9:47am

Subsidizing Moral Risk

When a lender makes a loan, he does so with knowledge of the risk of default, and the rate of interest charged takes this risk into account. Bankruptcy laws if properly written are not a free out for the defaultor. He must prove in court both the reasons for his bankruptcy and the reason why it is unlikely that he should be able to repay in the future. He must liquidate his assets, suffer the effects of the bankruptcy on his credit record, and make full restitution should he come into wealth within a certain period. The lender willingly takes the small risk of default in expectation of overall profit due to the interest made on non-defaulters.

By effectively making it impossible to default of student loans, the government is allowing the lender to make a guaranteed profit, backed up by government force, regardless of the unforeseen circumstances of the borrower. The borrower in effect becomes the lenders slave by proxy even if the lender should not have made the risky loan. This entails moral risk, with lenders encouraged to make loans to prospects whom they otherwise would not have been willing to approve. The inability to declare bankruptcy has the perverse effect of encouraging lenders to lend to those more likely to default.

The government should obviously not be in the business of ensuring government loans. In the past the government had made it too easy to default. So rather than the lenders seeking a free market solution, they successfully lobbied the government to encourage high risk borrowers to take sacks of money upfront so they could major in such remunerative subjects as French literature and comparative religion, only to have those students suffer the effects of a time bomb whose damage may only increase year to year, as the schools and lenders laugh as the government does their collections work for them.

Ted Keer

(Edited by Ted Keer on 8/10, 9:49am)

Post 8

Friday, August 10, 2007 - 10:47am

Thank you all. Very helpful. I'm looking forward to school even more now.

Post 9

Friday, August 24, 2007 - 11:32am

Rand specifically answered this question. She said it was morally acceptable to receive government assistance for education. The reason was that the government through its coercive collection of taxes will take money from you and thus you are actually just taking back what is rightfully yours. This might be compared to Ragnar Danneskold's pirate attacks and his return of the gold bar to Hank Reardon in Atlas Shrugged. Was Ragnar wrong to attack the ships? In a fully free society, yes. In the fascist state of Atlas Shrugged, no. If someone else starts it, you can hit back. Objectivism allows the right of self defense and retaliation. This is not a pacifist philosophy.
I do know much about these grants as I paid for my own education. I would recommend however you be careful about this. Trying to one up the state can be a treacherous game.

Post 10

Friday, August 24, 2007 - 5:02pm

"...The recipient of a public scholarship is morally justified only so long as he regards it as restitution and opposes all forms of welfare statism. Those who advocate public scholarships, have no right to them; those who oppose them, have...

"...The victims do not have to add self-inflicted martyrdom to the injury done to them by others; they do not have to let the looters profit doubly, by letting them distribute the money exclusively to the parasites who clamored for it. Whenever the welfare-state laws offer them some small restitution, the victims should take it...."

Ayn Rand, "The Question of Scholarships," The Objectivist, June, 1966

Post 11

Friday, August 24, 2007 - 6:53pm

Whenever the welfare-state laws offer them some small restitution, the victims should take it...."

Yep - and believe me, I do....;-)
helps get back all the moneys stolen from me over the years.....

Post 12

Saturday, August 25, 2007 - 9:01pm