Wednesday, April 09, 2008

Vedder on Lou Dobbs Show Tonight at 7 EDT

By Richard Vedder

I am going to be interviewed on the student loan problem on Lou Dobbs tonight at 7:00 p.m.Tune in CNN to see it.

Although it won't come through in a 90 second sound bite, my view is that if there is a student loan problem, it is a result of government policy failure. The general crisis in the financial services industry reflected excessively expansionary Federal Reserve monetary policies, the resultant explosion in housing prices, and a deterioration in credit quality. As Andy Gillen has noted, the student loan "bubble" likewise reflects excessively lower interest rates, soaring prices (of college), and the resultant decline in student ability to repay loans, particularly as interest rates inch up (and attempts to hold interest rates down by the Fed will only aggravate and possibly slightly postpone the problem). Little of this will get on the air, but it might be interesting to see this segment this evening.

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