So, what is the spirit of the student loans and why the US Congress enacted the law in 1958? And how the Act has evolved over time, what kind of changes have happened and if the changes have positive or negative impacts to the American public?
The purpose of NDEA is quoted below:
“National Defense Education Act (NDEA), U.S. federal legislation passed by Congress and signed into law by Pres. Dwight D. Eisenhower on September 2, 1958, that provided funding to improve American schools and to promote postsecondary education. The goal of the legislation was to enable the country’s educational system to meet the demands posed by national security needs. Of particular concern was bolstering the United States’ ability to compete with the Soviet Union in the areas of science and technology”.
The NDEA stands as a major act of reform. It marked the beginning of large-scale involvement of the U.S. federal government in education.
As stated above, the initial purpose of enacting the law is to increase the US ability to compete in the global arena. Commemorating its 60 years, let us analyze if the purpose has been achieved? The answer is definitely YES and it is still progressing! Many evidences have shown the US has made important innovations in both science and technology. However, at the same time these fine achievements have been tainted by (1). Decreasing cost effectiveness as a result of increasing college education cost, and (2). The progressing rate or growth may have been slowed down. One may ask the question, why?
Possible answers would be:
- Mismanagement. DOE is supposed to manage all the student loans, but desperately failed. Over the time, as the American population grew, more family have sent their children to college. It seems that the DOE as the loans’ manager overwhelmed which created many problems in collecting the repayment. Employees have not been trained properly. It is just a mess.
- Because of point#1, then DOE contracted to the third parties to collect the students loans. Some of these third parties are for-profit institutions with their stock publicly traded at Wall Street. Therefore, the soul of NDEA begin to be corrupted.
- The third party came into play such as for-profit higher ed, where their stock also traded publicly, but a failed business model. DOE as the public executor tries to get cleaned, but the students suffer from their (DOE) policy.
Now that the current regulator is confused what needs to be doing, flip-and-flopping from one ideas to the others, inconsistency and show no interest to deal with it. Solving the problem cannot be done by (1). One person and (2). Scrapping, deleting, amending, changing, revising and putting new policies on top of the others. Policy changes need to be done after intensive studies to see the impacts on the whole society and if the NDEA objective is attainable. NDEA is the moral guidance for every policy makers, lawmakers, colleges and universities decision makers and any other makers in Wall Street, Main Street or any other Streets. Away from the moral guidance, there would be no (any) equilibrium or peace., i.e., satisfy the American public needs.
The motivation of investors to buy, and hold the share from a publicly traded company is the return from their investment, in this case profit. If the company makes profit, the Wall Street will (1). Reward them by buying or holding their share which will increase the value/price of their stock and (2). Reward the CEO with higher salary, bonus and other perks, but the reverse is also true. Dumping and selling their holding of the company’s shares, if return on investment is less than the interest rate. Therefore, it is only logical for the for-profit higher ed to make bigger return/profit as it possibly can, i.e., by all means. The graphs show that in 2004, the COCO’s (parent company for Corinthian College) stock price reached its peak, but since then it has declined. The same pattern also found with APOL’s (parent company of the Univ of Phoenix). This is clearly examples of DOE’s mismanagement and subpar policy to let for-profit organizations get into the higher ed business.
We start seeing the pattern that once the investors get involved, thing will get murkier. The next logical question that one ordinary person will ask is that why the lawmakers fail to see the pattern. They perfectly see it, but they also need the contributions and financial support from the Wall Street, and big corporations for the campaign fund. Therefore, they, the lawmakers may be reluctant to work against the corporate America, in the expense of the general population (GP). What they need from the GP is their votes, but individual contribution will not as big of those of corporation. So, many are their empty promises during the campaign seasons.
Here are several points that the readers can take and think about:
- Who your representatives that you put in the office are actually working for?
- Will Uncle Sam ever solve the $1.4 trillion (with 9 zeros) student loans problem?
- Will education cost ever stop to increase under the current reward system?
- Has anyone realized that DOE (determine by the US Congress) charges higher interest rate for some of the loans than the commercial banks’ or the Fed’s prime rate?
- Is this an example how the US current state of economy has declined, compared to that of 60 years ago?