The first two lessons Professor Elizabeth Warren seeks to impart to every student matriculating at public universities are 1) do not pay the debts you incur, and 2) there is such thing as a free lunch.
That’s an F in ethics — and economics.
Calling public higher education “a basic public good that should be available to everyone with free tuition and zero debt at graduation,” Warren outlined a plan to make tuition free at state schools and provide “truly transformational” debt forgiveness “of up to $50,000 in student loan debt for 42 million Americans.”
Not to be outdone, Senator Bernie Sanders announced debt forgiveness on all $1.6 trillion in U.S. student loans and introduced a new version of his College for All Act. The irony of the socialist senator bailing out the bankers issuing the loans, subsidizing the largely upper-class kids taking them out, and bankrolling the elite institutions able to provide free tuition (but refusing) for the next several decades without making much of a dent in their endowments strikes as, well, rich. But the notion underlying his legislation — that college is for all — troubles more.
Many youngsters waste valuable years of their lives, and their parents drain their savings, only to discover the truth of this pay-no-attention-to-that-man-behind-the-curtain lie. This societal self-flattery that in our egalitarian nation college is for everyone and everyone is for college harms higher education to a greater degree. And as William A. Henry III observed a quarter-century ago in In Defense of Elitism, “Ultimately it is the yearning to believe that anyone can be brought up to college level that has brought colleges down to everyone’s level.”
Both Sanders and Warren double down on failure. Hard numbers and history prove that jacking up federal subsidies for college students makes higher education more expensive, not less.
Tuition, room, and board cost $14,238 in current dollars on average at four-year private universities for the 1963-1964 school year. By 2016-2017, that cost had nearly tripled to $41,468. The hyperinflation of four-year public universities sent tuition, room, and board from $7,306 for the 1963-1964 school year to $19,488 for the 2016-2017 school year. Other than goods also subsidized to such an extent by the federal government (e.g., healthcare), do you know of any other product that outpaced inflation nearly threefold over that period of years?
What happened to send college costs skyrocketing? The Higher Education Act of 1965 aimed to “provide financial assistance for students in postsecondary and higher education” through Perkins Loans, Pell Grants, scholarships, direct subsidies to universities, and other forms of student aid. It didn’t work. In fact, as anyone with a third-grade education can grasp from the above numbers, it accomplished the opposite of that intended. The moment the federal government made college affordability a priority, tuition and the rest exploded.
Anyone with a degree in common sense understands that institutions charge what they can get away with charging. Dramatic increases in student aid from 1965 onward resulted in dramatic spikes in the cost of college because schools knew that the market could bear paying higher costs given the federal government’s subsidy. The federal money incentivized schools to raise prices, and predictably they did.
Would, for instance, Davidson College charge $51,447 annually if administrators knew the federal government would not provide aid? Or, would the school lower prices to meet what the market could bear? They could not fill the freshman dorms without the government paying so much of freshman tuition, so reality would force them to lower prices to meet the market. The school charges so much because administrators know the feds take care of so much of that $51,447 bill. Rather than help students and parents, federal aid programs hurt them. Beyond this, the more the government failed to rein in prices, the more schools stood to gain by the inevitable public calls for more aid to alleviate higher expenses. In other words, the worse this program does the bigger it gets.
That Warren and Sanders, specifically, do the dirty work of academic grifters does not surprise. Warren scammed her way onto the Harvard Law faculty with a Rutgers law degree (every other tenured professor at the school with a law degree obtained it from a top-ten school) by passing herself off as a Native American; Sanders’s wife recently came under FBI investigation for alleged financial malfeasance in running (ruining?) Burlington College, which shuttered operations not long after issuing a sweet severance package to Mrs. Sanders, into the ground. The two senators, sponsors of the College for All Act that predated the revised one that Sanders announced this week, should rename it the Welfare for My Greedy Friends Act — truth in advertising.
The media reports that Elizabeth Warren and Bernie Sanders introduced plans to make college more affordable. Fact check: They introduced schemes proven to make college more expensive.