Every American student to receive a $1,000 federal grant to read the Spritzler Report
That's right. I'm proposing a bill to educate this nation's future leaders. Sorry, I meant indoctrinate. Anywho, every Gen Z, X or Y (I can't keep this straight) will receive money from the Federal Government to read the report. BTW, I'm now charging a $1,000 yearly subscription fee to cover my expenses.
How Colleges Will Cash In on Biden’s Student Loan Forgiveness
Academia will keep raising tuition, and students will have incentive to take out more loans.
By The Editorial Board, WSJ
Aug. 25, 2022 6:45 pm ET
President Biden on Wednesday lamented soaring college costs to justify his sweeping student loan cancellation. Students, he feels your pain. Yet he fails to recognize that the root causes of high costs are federal-loan and student-aid subsidies.
Like other Great Society programs, federal student loans and grants were initially aimed at helping low-income Americans. They have since become another all-you-can-eat entitlement. Its costs grow on autopilot as lawmakers boost subsidies in the name of making higher education more affordable, but in reality doing the opposite.
Undergraduates were allowed to borrow a total of $7,500 in 1973. But Congress over the years has lifted the lifetime federal loan limit, which is now $31,000 for students who are dependents and $57,500 for others. Congress in 1980 established low-interest Plus loans for parents, which were expanded to graduate students in 2006. These have no dollar cap.
Colleges have responded all too rationally by raising prices and using the free-flowing spigot to increase professors’ salaries, hire more administrators and build Club Med amenities. There’s a dean for everything these days. Since 1980 the average annual cost to attend four-year public and nonprofit colleges has increased by nine-fold to $22,690 and $51,690, respectively.
Tuition growth in recent years has moderated as demographic factors have reduced college enrollment and increased competition. Many small liberal arts schools have closed or merged. But others have adapted by adding expensive graduate programs.
The average debt for a master’s degree recipient is $71,287; for a doctoral grad it’s $159,625. Yet the median salary for a Ph.D. is a mere $55,000 in the humanities and $67,250 in social sciences. Many teach college classes for low pay while highly compensated tenured professors do research, much of which doesn’t add to the sum of human knowledge.
Colleges have no financial incentive to ensure that their programs impart skills demanded by employers or provide a decent living. What does it matter to them if an anthropology graduate winds up working as a barista? Colleges are paid on the front end, and government is now writing off the cost on the back end.
Mr. Biden says his half-a-trillion-dollar loan cancellation is necessary to address unsustainable student debt. But the Obama repayment plans already limit monthly payments to 10% of discretionary income and forgive the remaining balances after 20 years. Borrowers who earn little can pay little or nothing. Mr. Biden’s plan will encourage students to take out more loans and colleges to keep raising tuition.
The best way to reduce costs is to change the financial incentives for colleges. Former Education Secretary Bill Bennett once suggested that schools be required to take an equity stake of 10% to 20% in student loans. Missouri Sen. Josh Hawley introduced legislation in 2019 that would require colleges to pay half of the loans for borrowers who default.
House Republicans have proposed limiting federal graduate debt to $100,000, but this is too high. A better idea: Abolish graduate-school government loans. Private lenders say the feds have squeezed them from the market. There’s no reason for Uncle Sam to subsidize advanced degrees; private markets can price credit risk.
This may mean a student pursuing a master’s in film won’t be able to borrow as much or will have to pay higher interest rates. But this would have the salutary effect of compelling colleges to reduce prices. Students in medical and other graduate programs that typically lead to higher earnings won’t have trouble getting private financing.
Mr. Biden said Wednesday that his Administration is “holding colleges accountable for jacking up costs without delivering value to students.” He isn’t. He’s only targeting for-profit colleges. His proposed gainful-employment rule would cut off federal student aid to some 40% of for-profit programs whose graduates don’t meet certain earnings or debt-to-income measures. But he’s giving a pass to nonprofit and public colleges that are no saints.
Why not apply the rule to all colleges? Because Ivory Tower progressives vote for Democrats and don’t want to be responsible for student outcomes.
Public and nonprofit colleges are like any other business, except they can profit from taxpayer subsidies without accountability. Mr. Biden’s loan write-offs show this system has failed to reduce student costs while enriching an academic elite, and soaking taxpayers. It’s time for reforms that hold them accountable.