During the Democratic primary process, candidate after candidate promised voters the moon. Long on aspirations – and shortly afterwards on how to pay for them – the debates so far have been a competition of who could promise whom.
Any high profile proposals, particularly Medicare for All and the Green New Deal, would be expensive. But none of them would – for generations – bear the social cost of canceling all student loan debts.
This notion so famous by Sen. Bernie SandersBernie SandersThe Hill’s Morning Report – Presented by Alibaba – Progressives Ready to Fuel Infrastructure Bill Democrats Look For Sweet Spot Under 0.5 Trillion Price Tag Progressive Democrats Want To Clean Up The Term “Moderate” MORE (I-Vt.) Seems to have been held almost everywhere in the democratic field since his Quixotic presidential candidacy in 2016. Sander’s proposal would eliminate student loan debt for all 45 million borrowers, costing taxpayers an estimated $ 2.2 billion; this proposal “surpasses” Sen. Elizabeth WarrenElizabeth WarrenThe Hill’s Morning Report – Presented by Alibaba – Progressives Ready To Fuel Infrastructure Bill Democrats Look For Sweet Spot Under 0.5 Trillion Price Tag On The Money – Democratic Divisions Deepen As Progressives Hold The Line MORE‘s plan that would “only” relieve 75 percent of borrowers.
But to be fair, liberal politicians aren’t the only ones advocating this idea. Some influential voices on the right have also advocated forgiveness. For example, Matthew Peterson from the Claremont Institute recently proposed that President Donald Trump “must propose a one-time student loan program in exchange for the closure” [the] entire federal educational loan program. “
How would we pay for such a giveaway? It’s as simple as setting a new sales tax, as another conservative scholar suggests.
But these “conservative” proposals are just as imaginative as the rhetoric of the democratic candidates.
The silly mandate of putting aside a new tax and making student loans would be political suicide for conservative politicians. This is especially true for President TrumpDonald TrumpTexas does not provide a private contractor for the election test Lack of helicopter room forced Ivanka Trump, Kushner, to MORE plans to meet with Queen Elizabeth II Governor. The reason? A disproportionate proportion of student debt is held by college graduates (48 percent of all debt) and the highest incomes – more than a third of all student debt is held by borrowers who earn $ 97,000 or more. Most importantly, the president’s grassroots supporters would see forgiveness for what it is: a huge giveaway for the elites, so many of whom have used their activism majors and identity group degrees as weapons to undermine America.
It is not difficult to imagine the turmoil that would arise among the serious souls who have diligently paid off their debts, which most borrowers continue to do despite the rising trend in default rates. Policy makers should keep in mind that only 17 percent of American adults are in student debt.
Asking the right question
This whole debate has suffered from asking the wrong question. The question is not how much debt we can forgive on student loans; That’s how we got here in the first place.
The answer is clear: government. Since expanding student loan programs beyond their original intent to provide access to low-income students, the government has done what the government always does: building a near-monopoly of itself and effectively abolishing private lending. The result is skyrocketing tuition fees fueled by administrative bloat and disgusting construction projects. Higher education spending in the 21st century has little to do with student education.
Solving this problem, like any government-made mess, will require time and determination. Like John Cogan us in his great The high price of good intentions, “The creation of claims creates relentless forces that cause them to expand inexorably.”
Illustrate the problem
The negative consequences of the excessive involvement of the federal government in student loans were inexorable. For example, consider the disastrous track record of the college that hosted the last Democratic Debate, Texas Southern University in Houston. As the Department of Education college scorecard data shows, with a tuition fee of $ 20,000 a year, only 20 percent of students will graduate within six years, raising an average student loan debt of nearly $ 30,000 . And only 27 percent of the school’s student borrowers pay at least a dollar on their student loan within three years of leaving school – one of the worst records in the country.
Unfortunately, Texas Southern does not stand alone as an example of the absurdity of the system. Consider Michigan’s Thomas Cooley Law School, where students pay tuition fees on par with the most competitive law schools in the country. The return on investment is miserable, with only 25 percent of graduates working in law one year after graduation – and 50 percent overall unemployed. But our current student loan system is so imperfectly aligning investments with results that the federal government does not differentiate credit risk between Cooley Law and law schools with far better employment numbers.
It gets worse. The case of the Charlotte School of Law is particularly egregious, which resulted in the U.S. Department of Education taking an underutilized move – the cancellation of the school from approved student loan recipients. That was fatal for the college, which received 90 percent of its income from state student loan programs; Since then, students have sued the now-closed school for fraud.
The Ministry of Education must take stronger action against universities that commit educational fraud. That move should in turn be followed by other bold moves – decoupling federal student loans from college and academic programs with poor results. Too many Americans – in our irrational belief today that everyone must get a four-year degree – have been fooled into believing that any college in America is worth the investment. The state student loan system has guaranteed the opposite is the case.
These loan waiver alternatives, along with an expanded income-based repayment program, are currently administratively possible without Congress intervention. Longer-term solutions that include action by Congress should include the ability to pay off student loan debts in bankruptcy and require universities – many with obscene and underutilized foundations – to share the burden of their graduate loans when they fail. Ultimately, Congress should get the government out of the lending business entirely and leave the federal government to do what governments often do well: collect data on results and trends, make them transparent and easily accessible to consumers so that students and the market can understand higher education to make great again.
President Trump would be particularly effective at this message because, at its core, it is a criticism of the elite of the elite – university administrations and liberal academics. This would be Trump’s message at its finest, placing responsibility on the tiny group of university bureaucrats who armed the state student loan system against the students themselves, whether financially or in promoting the empty programs and identity politics that undermine America’s ideals.
We can acquire the moral superiority of the braggers on the left on this issue.
Dr. Kevin Roberts is executive director of the Texas Public Policy Foundation and a past president of Wyoming Catholic College, which he presided over until his decision to turn down federal student loans and scholarships.