Government Makes the Higher Ed Bubble Worse
This editorial from the New York Post perfectly describes the vicious cycle of student loan debt.
The college bubble
On one thing President Obama and Gov. Cuomo are agreed: The answer to high tuition and crushing student debt is more money from the government.
Problem is, it’s precisely government dollars that are driving up the price of college tuition at a rate far faster than general inflation.
Right now, colleges have no skin in the loan game: If a kid drops out before earning his degree, or if she earns a degree that is worthless and so can’t get a job that pays enough to let her pay off her loans, that’s terrible for her.
But the school has already been paid.Obama has just proposed free community college and more federal efforts to help ease the burden of paying off student loans.
Meanwhile, here in New York, Cuomo says graduates of state public or nonprofit colleges who earn less than $50,000 a year, live in-state and join the federal Pay as You Earn Program would see Albany pick up two years of their loan payments.Again, no one disputes that paying for college has become increasingly difficult even as a college degree is no longer the guaranteed ticket to a comfortable, middle-class life it once was. America has a total student loan debt of more than $1 trillion — more than what Americans owe on their credit cards — and the average college debt for a New York grad is $26,381.
But the “fixes” on offer from both the president and the governor would only fuel the problem of escalating tuition, because they include no incentives to control costs.
Comments
Every time the gov tries to micro-manage the free market it created bubbles. The gov loves bubbles. They are an excuse to hire more gov employees, collect more in taxes and repeat the cycle with the next bubble. The last bubble the gov will create will be the big gov bubble. When that pops, look out.
The fundamental problem is calling anything the government offers “free”. Free community college is not free. There is no such thing as a free lunch. Transferring the debt from overburdened college graduates to the overburdened taxpayers as a whole does not free us from the debt, it just shifts who pays it and how. Locking students into staying in New York or into teaching when there may be better jobs elsewhere or in other fields also shows the NY is bankrupt in attractiveness. Government likes student debt because its solutions give government more control over the students’ post college lives.