The Federalist has a thought-provoking piece on student loan debt today. Daniel Oliver believes the issue represents an incredible opportunity for the Republican Party. He argues that Republicans should endorse forgiving all student loan debt while at the same time eliminating all future student loan assistance programs.
This is a big idea. Before you start shouting about personal responsibility, hear Oliver out:
Student debt is a public-policy issue that will keep on giving—giving problems to the Democrats, who created it, and the opportunity of a lifetime to Republicans, if they have the wit to seize it.
The total student-loan debt is huge, an estimated $1 trillion. Average debt per borrower in 2012 was $24,800. Of the trillion dollars, about $758.5 billion is owed to the federal government. The rest is owed to private lenders…Only a few days ago, Josh Mandel, the treasurer of Ohio, wrote about a company that was paying sixty of its welders more than $150,000 a year, a salary that puts them in the top 10% of earners. He cited a 2012 Bureau of Labor Statistics report that found that 48% of college graduates are working at jobs that don’t require a four-year college degree…Skilled blue-collar labor has to be more rewarding, financially and emotionally—even if tony liberals look down their long noses at it.
The second problem is that student loans allowed colleges to raise their costs—to feather their nests at students’ expense. College costs have risen much faster than inflation. To take just one example, in 1966, tuition at the University of Southern California was $1,200 a year, which in today’s dollars would be $8,751.59. So how much does a year’s tuition cost today? $42,162!
Oliver makes some great points. The fact that our policy towards higher education has traditionally been “more more more” and “spend spend spend” has allowed universities to drastically overcharge their students. This is what happens when the government artifically props up sectors of the economy. Many of these institutions have multi-million- and even billion-dollar endowments (looking at you Harvard and Princeton), yet the government still spends $109 billion on subsidies to these institutions.
If we eliminated all subsidy and loan programs, universities would then be forced into competition and efficiency. Instead of the brighest kids fighting and scratching to get into Yale, Yale and Princeton would fight to get those kids, regardless of who their fathers are. Yes, some colleges would close their doors, and yes, fewer people would go to college, but everyone isn’t meant to go to college. So called blue-collar jobs still exist and pay handsomely.
Now for the hard part. Oliver also calls for forgiving the $1 trillion in loan debt that American students have currently. Conservatives believe in personal financial responsibility and freeing folks who made poor choices probably grates a bit. Indeed, what about those of us (myself included) who paid off their student loan debts? Now I have to watch as others in my generation get a free ride? That doesn’t seem fair.
However, I’d be willing to support this for a few reasons. First, every high school guidance counselor in existence has been telling kids to borrow money to go to college for the past fifty years. Many eighteen-year-olds did so simply because they were listening to those “authorities” around them. Second, if the GOP brings this idea to the table it will go a long way to garnering votes from young people who are starting to wake up to the financial realities they face because of progressive policies. Finally, eliminating subsidies and all federally funded college loan programs is a bitter pill to swallow and we need some sugar to help get it down.
The best part? It makes financial sense. If this deal was made, Oliver calculates that the Treasury would make the money back in nine years, freeing young professionals to inject their capital into the market instead of paying down debt. There are some open questions, such as how many jobs would be lost due to eliminating an entire cottage industry, but I believe the good outweighs the bad here and it represents some needed outside-the-box thinking for the GOP.