It seems like every six months or so, Glenn "Instapundit" Reynolds disgorges his regular "How to fix US colleges" post in an actual publication of record.
This graduation season it's the WSJ (natch) as he recycles oldies but goodies on making higher education subject totally to the "free market", calling student loans "immoral".
Now here's where the real immorality
kicks in. The skyrocketing cost of a college education is a classic
unintended consequence of government intervention. Colleges have
responded to the availability of easy federal money by doing what
subsidized industries generally do: Raising prices to capture the
subsidy. Sold as a tool to help students cope with rising college costs,
student loans have instead been a major contributor to the problem.
In truth, America's student loan
problem won't be solved by low interest rates—for many students, the
debt would be crippling even if the interest rate were zero.
If we want to solve the very real
problem of excessive student-loan debt, college costs need to be brought
under control. A 2010 study by the Goldwater Institute identified
"administrative bloat" as a leading reason for higher costs. The study
found that many American universities now have more salaried
administrators than teaching faculty.
Actually the major problem in universities and colleges is that states have made massive cuts to university system budgets since the 2007 financial crash. If they were serious about lowering tuition and loan costs, states would invest more in higher education, not less. That's pushing college tuition up.
Second, student loans were, until recently, a massive cash cow for the same banks that nearly collapsed our economy. They were profiting handsomely on student debt and will still continue to do so for older loans for some time. Also pushing prices up.
Third, the influx of H-1B visas used to recruit science, technology, engineering and math graduates from other countries isn't covering any shortages. If there were shortages, engineers would be making tons of money. They're not. What's going on is that firms that hire these folks are hiring them at garbage salaries and then complaining they can't find anyone to fill the positions except for immigrants. That's pushing prices up too.
Fourth, for-profit higher education universities continue to push prices up by again using profit motive on an oligopoly to move prices higher. His fixes address none of these issues:
A serious student-loan fix would change this incentive. First,
federal aid could be capped, perhaps at a national average, or simply
indexed to the consumer-price index, making it harder for schools to
raise tuition willy-nilly. Second, schools that receive subsidized loan
money could be left on the hook for a percentage of the loan balance if
students default. I would favor allowing students who can't pay to
discharge their loan balances in bankruptcy after a reasonable time—say,
five to seven years, maybe even 10—with the institutions that got the
money being liable to the guarantors (i.e., the taxpayers) for, say, 10%
or 20% of the balance.
You can bet that under this kind of a
rule, universities would be much more careful about encouraging students
to take on significant debt unless they are fully committed first to
graduating, and second to a realistic career path that would enable them
to service that debt over time. At the very least, schools would be
more likely to warn students of the risks.
What Reynolds's recommendations would do is make college completely unaffordable and unavailable for Americans who don't have $150,000 or so to attend a university. In fact, his plan would be to shut down all but the most profitable college degree programs and get rid of most university faculty. If we only send people to college because of profit motive rather than to learn, universities stop becoming universities, and start becoming even more of a barrier to income equality than they are now.
Which is the point: to limit universities (and the ability to land an upper-class job) to the rich and the rich only. That's immoral, but don't tell Instadouche here.
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