Recently, Obama trotted out another one of this emotion tugging memes that won’t have any effect on the economy – Keeping new Federal Student Loan rates low.  This is just another ploy similar to the Buffett rule or the whopper he served up last week – cracking down on all those oil speculators. 

While all of Obama’s “plans” are meaningless in Macroeconomic terms, I would like to take this opportunity to talk about Federal Student Aid.  I’ve noticed many conservatives recently voicing their opposition to the Federal government participating in grants and loans to college students and they have serious beliefs that those programs should be eliminated.  It’s not just pundits and wannabe pundits making this claim because many of the Republican presidential candidates advocated eliminating the entire Department of Education.

“Rep. Michele Bachmann, R-Minn, former New Mexico Gov. Gary Johnson, Rep. Ron Paul, R-Texas, and Texas Gov. Rick Perry want to eliminate the Education Department. “

Of course none of these four will be the eventual Republican Presidential nominee but they aren’t exactly lone wolves with their idea that the Federal Government shouldn’t be in the education business.  Their arguments are constitutional in nature and are basically summarized by a quote from the Daily Iowan article linked above:

“Bob Anderson, the chairman of the Johnson County Republicans, said eliminating the Education Department is a philosophy based on states’ rights.

“Education is one of those various issues that is principally reserved for the states and the localities,” he said. “Reserving privacy to the states is the strong principle of the overwhelming majority of Republicans. None want to see [the Education Department] as a controlling, dominating influence in the education process.”

I find it hard to argue with Mr. Anderson but before I get to my views on the topic, there is a brief history of Federal government involvement in education that the Daily Iowan provides which is important to the conversation:

“The Education Department administers Pell Grants and student loans and provides access to higher education for millions of low-income students at more than 6,000 postsecondary institutions, said Jane Glickman, a press officer at the department. In 2011, it’s operating on a roughly on a $71 billion budget.

The Higher Education Act of 1965 created the federal student-loan program, distributing student loans through two different federal programs — Direct Loans and Federal Family Education Loans.

The U.S. Department of Education, which opened in 1980, became the sole administrator of all federal student loans in 2010 following the elimination of the Federal Family Education Loans program.”

My Story

I was fortunate to be born to loving parents who taught me the value of hard work and the importance of an education.  They did what they could to provide for my needs and both of them worked hard to make ends meet and ensure their kids had a life better than they had when they grew up.  Our family was not wealthy and I’d characterize us as somewhere between poor and middle class so that meant when time came for me to apply to colleges there was no money in a savings account that my parents could use.  No stock options to exercise.  No 529 college savings plans to fall back on. 

I didn’t always make the best decisions while in high school and even though I scored well above average on the ACT (which I took while hung over) I didn’t qualify for academic scholarships, I wasn’t blessed with athletic ability sufficient to be awarded an athletic scholarship and even the Navy turned me down for an NROTC scholarship due to health issues.  I was about to graduate from high school and although my parents had drilled into my head since I was old enough to understand that I was going to college, that scenario didn’t seem possible from where I sat.

I’ll skip ahead to let you know the story has a happy ending; I did go to college and received Bachelors and Masters Degrees in Electrical Engineering.  As a professional engineer I travelled all over the world designing, installing and commissioning manufacturing facilities and I am now blessed to direct a medical device manufacturing facility that makes life saving devices.

So how did I get from that desperate situation as a high school senior to my current position?  Community College, hard work and help from the Federal grant and loan assistance programs.

There was a great community college in my home town that would allow me to take the freshman and sophomore college credits in an engineering program which would transfer to several of the state colleges.  Since the tuition at the community college was a fraction of the state college tuition, my parents were able to pay for the first two years and this bought me time to figure out how to pay for the remaining years of my education (which I had decided would be completed at the University of Louisville).

When I was 16 I got a job at a local Wal-Mart to pay for my car and allow me some playing around money (which more often times than naught got me in trouble) and from that day forward I would always have a job.  Shortly after getting this job, my dad gave me some valuable advice that proved to be a major contributor in my ability to eventually go to college – he suggested I participate in the employee stock purchase program.  I didn’t know much about the stock market back then but I followed his advice and by the time I left to attend a traditional four-year university the stock had split several times and it paid for much of my junior year.  I failed to mention that I worked at Wal-Mart during the mid to late 1980’s and anyone following Wal-Mart stock back then knows what a smart investment that was!

That was a great plan for the first 2 years and part of my third year but there was still a huge gap between what I had and what I needed to pay for the rest of my education and that is where the Federal Student Aid program came in.  After filling out the Financial Aid Form, I qualified for not only low interest student loans but thanks to my parents’ low earnings, I also qualified for Pell grants that I never had to pay back.  Bottom line – The Federal loans and grants were enough to bridge the financial gap and they allowed me to pay for the rest of my bachelor’s degree.

I still needed to work part time jobs, participate in college work studies and work 3 different internships to not only live while in school but also pay for my graduate school (the Pell grant didn’t pay for graduate school) but that wasn’t a bad thing either since the studying and jobs kept me out of trouble.  The Pell grants and student loans weren’t like winning the lottery because life was still tough and I had to work throughout my entire college experience to just get by (not to mention spending 10 years paying off those loans after I graduated).  In hindsight, the jobs I had during college contributed to my education and gave me motivation to continue my studies so that I could have a better life but without the grants and loans, I couldn’t have financed my education.

While I agree with the constitutional argument that the Federal Government shouldn’t be in the education business, I do agree in providing financial assistance to help those less fortunate finance their education.  Higher education is the tide that floats all boats and I have more than paid those grants back through my taxes from my higher wages that I couldn’t have hoped to attain without my education.  If we want to move this education assistance program from the Federal level to the states then I’m all for that but I’m not for totally eliminating education assistance.  I am the poster child for what government education assistance can do when given to someone who works hard and has a desire to improve one’s life.  Money alone won’t give someone an education as it must be coupled with a strong work ethic.

ADDENDUM

There is more to this story that is unrelated to Federal Student Aid and I would file this under the “When God closes a door, He opens a window” category.

As I stated earlier, when I turned 16 I got a job at Wal-Mart but there was another significant life event that happened that same week – I tried out for the high school baseball team.

Baseball was my sport and I was fairly good at it but due to an injury I suffered in 8^th grade, I skipped tryouts my freshman year and chose to make a go of it during my sophomore year.  Baseball was going to occupy a lot of my time in high school so I came to the decision that if I made the team, I’d quit my job and focus on baseball (which would mean I wouldn’t be able to buy a car too).

To my great disappointment at the time, I wasn’t selected to be on the team.  I was heartbroken but as I stated above, the job at Wal-Mart helped finance my education and I don’t know if I would’ve been able to go to college without those valuable stock shares and the intangible work ethic that was instilled in me during my time at Wal-Mart. 

This just goes to show you that our wants are not always what is planned for our lives.