American Elephants


More College Graduates Aren’t Necessarily a Good Thing. by The Elephant's Child


President Obama stopped in at the University of Colorado on his Wednesday campaign swing, to urge thousands of college students to make their voices heard:

Young people, I need you guys involved. I need you active, I need you communicating to Congress, I need you to get the word out. Tweet `em. They’re all tweeting all over the place, you tweet `em back.

“The president took off his jacket and rolled up his sleeves on the last stop on a 3-day fundraising swing through the West that mixed high-dollar fundraising with new announcements of modest executive actions to circumvent Congress,” reported the AP.

We can’t wait for Congress to do its job, so where they won’t act, I will. I am going to do everything in my power to make a difference for the American people, but Denver, I need your help.

So to get the help of young people, Obama plans to have taxpayers pay for student loans.  He has a lot of opportunity in this area because he early on had the federal government take over the student lending business in America.  He claimed the measure would be a cost-savings measure, saying that the old system of privately-issued, government guaranteed loans reduced the amount of money available for needy students and prevented the feds from making the system more efficient.

Now he is using that new power to obtain a taxpayer-financed stimulus that Congress would not approve.  The idea is to cap student loan rates at 10 percent of a debtor’s income that is above the poverty line, then limiting the life of the loan to 20 years.

So assume that Jerusha Jones gets into Old Ivy University and borrows, in a government loan, the$200,000 she needs to get an undergraduate degree in women’s studies.  Her repayment schedule will be based on her earnings.  If she opts for public service and takes a job as a city social worker earning $25,000, her payments will be limited to $1,411 a year after the $10,890 of poverty-level income is subtracted from her total.  After twenty years at that rate, taxpayers would get back just $28,220 of their $212,000 loan to Jerusha. [Example shamelessly borrowed from Chris Stirewalt because he already did the math.]

Student debtors will be able to refinance and consolidate their loans on more favorable terms, so they pay less.  You can see how this is a major cost-saving measure, for the students at least.Though according to a report on the radio news, student debts from years previous to Obama’s term in office would not be eligible .

This is coming at a time when many economists are warning of a college debt bubble that is distorting the entire picture. Cheap credit on easy terms increases the amount of money chasing the diploma, allowing schools to further increase prices — which have been hugely outpacing inflation for years. Tuition and fees at public four-year colleges and universities jumped 8.3 percent this year. Private, non-profit colleges raised tuition and fees 4.5 percent — still twice the rate of inflation.

So Obama can run up the national debt with a stimulus that Congress would not pass, and buy the votes of gullible college students. He plans the same trick with underwater mortgages — raising the debt by executive order to lower homeowner’s mortgage payments.

Government interference has enabled colleges and universities to raise their rates to ridiculous levels. And of course each institution raises their rates in line with everybody else. Did you never wonder why there isn’t a splendid example of someone holding down costs? Schools have added administrative staff, built new facilities, landscaped, added climbing gyms, theaters, and elaborate labs. Also grade inflation, fun classes, silly studies, and graduates that can’t read well, write clearly, or have any understanding of history.   Go figure.


3 Comments so far
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Make universities co-sign the loans, instead of the taxpayers.
That would incentivize cost-control, higher graduation rates, and job placement .

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Comment by Terry_Jim (@Terry_Jim)

Good one. That should do away with some of the assistant administrators, and perhaps even some women’s studies and men’s studies classes (Are there men’s studies?)

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Comment by The Elephant's Child

you also have universities with multi billion dollar endowments, but choose taxpayer funding for new buildings on their campus. Harvard has an endowment of over $20 billion for 2011.

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Comment by Douglas Allen (@SeattleSports64)




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