I believe the continuing inflation we see in higher education is the direct result of the student loan program. The loans increase demand for the educational product and the increased demand drives up the cost. This spiral will continue until the government gets out of the student loan business. Why not government loans to buy cars or dishwashers or computers? Which part of article one section eight of the constitution authorizes the federal government to issue loans?
It is time for the education industry to be forced to produce a quality product at a competitive price just like the auto industry or the computer industry. We have all heard the stories of how our grandparents worked their way through college. This was possible when colleges had to compete and offer an affordable product. It is government student loans that have produced the high cost of higher education. It is no coincidence that it was about the same time the federal government started guaranteeing student loans that the cost of college began to accelerate.
Imagine for a moment no government student loans and the three following students going to a bank to apply for a student loan:
Student one had poor grades in school and did poorly on his college entrance exams. He says he wants to study psychology. His parents are willing to co-sign on the loan but have a poor credit score. The banker, not the taxpayer will take a loss if the student defaults. He politely says no. He doesn’t think the job market for psychology majors will be hot or that his chances of finishing the degree will be good. He realizes he won’t be doing this young man a favor by saddling him with debt he likely can’t repay.
Student two had better than average grades in high school and did slightly better than average on college entrance exams. She wants to get a degree in elementary education and be a teacher. Her parents have an average credit score and are willing to co-sign on the loan. The banker thinks she has a good chance of completing her degree and getting a job and that she and her parents are a good credit risk. He grants the loan.
Student three had better than average grades in most subjects, but was a whiz kid at math and took calculus in high school. In her college entrance exams she scored better than average overall and aced the mathematics part. She wants to be a mechanical engineer. Her parents are a better than average credit risk and are willing to co-sign. Upon further questioning, the banker learns that the young lady participated in several extra-curricular activities in high school and was student council president. She has already been waiting tables on Saturdays and making good tips. She plans to attend a college in her home town, live at home, and avoid paying for rent, utilities, travel and food. She plans to work during the summer months as a waitress and apply it to the loan. The banker thinks she has an excellent chance of finishing an engineering degree and paying back the loan. He gladly grants the loan.
In the meantime, the constant flow of cash to the colleges has evaporated. They stop building fancy new cafeterias, stop building new multi-million dollar exercise facilities which contribute nothing but cost to education and stop paying exorbitant salaries to middle management employees. As a matter of fact, many unnecessary administrative jobs have been eliminated. In addition, many of the “fluff” degree programs have been eliminated or greatly reduced. The colleges are having to compete on quality AND price. As a consequence an amazing thing happens: the cost of college starts to plummet rapidly.
It’s time to stop aiding the colleges to rip off students and taxpayers. It’s time to stop funding degrees with no market value. Let the wealthy fund their kids’ degree in art history or Latin American studies. Stop forcing taxpayers to do it. This will never happen unless you cut the funding. It’s time for congressmen and senators to stop posturing about the high cost of college and actually do something about it. Cut the funding and allow the free market and its incredible “invisible hand” to do its magic and make college affordable again.