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.

Student Loan Debt Needs Some Cost-Benefit Analysis. by The Elephant's Child

Many of the young protesters in the OccupyWallStreet demonstration are complaining about their huge student loan debt.  Apparently none have ever done a cost-benefit analysis. You have to feel a little sorry for young people with a hundred and twenty-five thousand dollar debt for college certification. That’s absurd. Has no one noticed that every time fhe federal government ups the Pell Grants and amounts students can borrow, tuition and costs go up? It is not an accident.

At the same time, students are graduating, fully certified, who seem to know nothing about economics, history, math or science, and may  not read well or write coherently..  Whatever happened to core requirements? The public pronouncements of many professors offer unintentional explanations for the ignorance of graduating seniors. Professors complain that high school graduates are unprepared for college work, and require too much remedial study before they are prepared.

Since 1982, the cost of attending college has increased 439 percent, more than four times the rate of inflation.  Increases in college costs exceed increases in health care costs which have risen more than 250 percent in the same time period.

Pell grants (which don’t have to be repaid) average $3,865 for the 8.3 million students who received one.  The maximum award is $4,860.  Pell Grant funding has nearly doubled in the last two years, and the Obama Administration wants another $5.7 billion. New student loan legislation passed as part of the ObamaCare Act and included $13.5 billion in mandatory Pell funding through 2012.

Andrew Gillen, an expert in higher education financing, has dubbed the  dysfunctional higher education market an “arms race” where vast resources are targeted toward non-academic purposes such as athletics, building renovations, and administrative overhead costs in order to compete for students.

Students and their parents who have forked over somewhere in the vicinity of  $100,000 to $200,000 for their diploma have high expectations for that certification. Hence vast grade inflation.  A piece in the Harvard Crimson a while back said that 77 percent of graduating classes graduated with honors. Desperate employers just want proof that a potential employee can actually read whatever written material they are given, and write in clear language.

For those who are organized and determined, there’s a perfectly good college education available for free.  Try your friendly public library. They have most of the important books, and can get you anything you want by interlibrary loan. There are documentaries and language instruction tapes.  You can even look at catalogues from colleges and universities across the country, see what they want you to read, and make up your own course of study.

President Obama wants every child to go to college.  I disagree. Many are not college material. We have some splendid examples of college dropouts in Steve Jobs and  Bill Gates.  Governor Rick Perry has asked Texas Universities if they can’t come up with a college program for no more than $10,000 a year, and they said they could.

Now that would be real progress.

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