Student Loan Debt: A Bottomless Pit | National exam
To anyone’s surprise, Biden & Co. decided to write off $ 500 million in loan debt for students who had enrolled in now-defunct ITT Technical Institute schools. They have all been “misled” by ITT’s statements about their likely earnings. Without a doubt, but many nonprofit colleges make similar statements to attract students.
Forgiving student debt is good policy. Democrats look sympathetic, and many students will be thankful they don’t have to pay back their loans. As for taxpayers, well, a tiny increase in the federal government’s budget deficit will not be noticed. What has not happened and certainly will not happen is a move to fix this problem.
ReasonMike Riggs associate editor has a good article on this point.
Riggs writes: “While inducing low-income people to borrow money they cannot repay for an education they cannot use is probably the worst consequence of federal grants to higher education, we also now know that easy loans have inflated the cost of ‘good colleges and universities, which compete by increasing costs in order to absorb grants that they can invest in prestige points rather than in preparation for the workforce: nicer buildings, more sophisticated food services, more after-school programs, and an abundance of non-academic staff for participants, especially those at nonprofit liberal arts colleges, to progressives rarely criticize for their ever increasing sticker prices, feeling like they are staying at a resort with the occasional class.
He is right. Federal student aid is at the origin of the prodigious expansion of higher education and the vast inflation of its cost. There is no constitutional mandate for federal largesse, but, unfortunately, the Constitution’s limits on federal spending were swept away a long time ago. We will continue to waste resources on unnecessary university degrees at enormous prices as long as we continue to subsidize them.
Riggs continues, “There are so many other things we should be doing differently. Many for-profit programs probably wouldn’t exist without professional licensing requirements, such as those for the [cosmetology] industry; other for-profit programs, such as those that train students for administrative roles in medicine, are a result of the U.S. healthcare system’s metastatic need for paper pushers capable of handling labyrinthine billing operations and complying with regulations. “
Indeed. Let us mitigate the inflated demand for higher credentials. It would help at the margin. Ultimately, however, we must get to the root of the problem and get the federal government out of the business of university finance.