Obama May Claim to Want to Cut College Costs, But He's Unwilling to Take the Federal Money Out


Politico reports today on Obama's latest technocratic bureaucrazied "feds know best" plan to tie federal student loans to highly sophisticated ratings about how worthy various schools are to receive this largess. 

Prabhu B Doss / Foter / CC BY-NC-ND

But as Matt Taibbi explains in a surprisingly libertarian-leaning long Rolling Stone report on the student loan crisis, all that federal money is the problem (along with a culture that grossly overvalues having a college degree for all):

Tuition costs at public and private colleges were, are and have been rising faster than just about anything in American society – health care, energy, even housing. Between 1950 and 1970, sending a kid to a public university cost about four percent of an American family's annual income. Forty years later, in 2010, it accounted for 11 percent…

Turning down the credit spigot [from the government] would force schools to compete by bringing prices down. It would help to weed out crappy schools that hawked worthless "degrees in bullshit." It would also force prospective students to meet higher standards – not just anyone would get student loans, which is maybe the way it should be…..

Bottomless credit equals inflated prices equals more money for colleges and universities, more hidden taxes for the government to collect and, perhaps most important, a bigger and more dangerous debt bomb on the backs of the adult working population.

The stats on the latter are now undeniable. Having passed credit cards to became the largest pile of owed money in America outside of the real-estate market, outstanding student debt topped $1 trillion by the end of 2011….

One final, eerie similarity to the mortgage crisis is that while analysts on both the left and the right agree that the ballooning student-debt mess can be blamed on too much easy credit, there is sharp disagreement about the reason for the existence of that easy credit. Many finance-sector analysts see the problem as being founded in ill-considered social engineering, an unrealistic desire to put as many kids into college as possible that mirrors the state's home-ownership goals that many conservatives still believe fueled the mortgage crisis. "These problems are the result of government officials pushing a social good – i.e., broader college attendance" is how libertarian writer Steven Greenhut put it.

Others, however, view the easy money as the massive subsidy for an education industry, which spent between $88 million and $110 million lobbying government in each of the past six years, and historically has spent recklessly no matter who happened to be footing the bill – parents, states, the federal government, young people, whomever…

Taibbi ignores that those two are not opposing explanations–they are just two sides of the same coin; as with so much government attempts to "do good," they can't do so without funnelling tons of money to some powerful business interest. That's always a difficult thing for progressives to grapple with, so they imagine opposing forces of government do-gooderism and corporate greed fighting, rather than skipping gleefully together hand-in-hand through piles of other people's money, which is how the world really works.


There are powerful reasons for both the left and the right to be willfully blind to the root problem. Democrats – who, incidentally, receive at least twice as much money from the education lobby as Republicans – like to see the raging river of free-flowing student loans as a triumph of educational access. Any suggestion that saddling befuddled youngsters with tens of thousands of dollars in school debts is somehow harmful or counterproductive to society is often swiftly shot down by politicians or industry insiders as an anti-student position. The idea that limitless government credit might be at least enabling high education costs tends to be derisively described as the "Bennett hypothesis," since right-wing moralist and notorious gambler/dick/hypocrite Bill Bennett once touted the same idea.

Bennett was wrong about a lot, but not that.

Reason on education costs.

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  1. Want to cut costs? Stop subsidizing and regulating education. It’s not something the government should be involved in. At all.

    1. What do you hate the children, ProL?

      1. Ha! I have four of my own!

        I’m shocked and saddened by some aspect of public education almost daily, with kids in college, virtual school, home school, and public high school.

        Just today, my wife was running through the additional fees tacked on to my son’s college tuition, at a state school. It’s not far from what I paid at a private law school. Absurd.

        1. It’s not only Ticketmaster that tacks on service fees…

        2. Your son’s undergraduate, or graduate? Public law schools in my experience tend to charge just about as much as private.

          1. Undergrad. I’m not paying for graduate school at all, not with four kids and my retirement pegged to whenever we have fusion reactors.

            1. Ah, yeah, it’s gotten pretty crazy. Well, at least he probably has shinier buildings and a much nicer gym than where you went, and more support staff. That’s where the money is going.

              Too bad you can’t opt-out of some of those fees– though a lot of students wouldn’t want to, it’s a way of getting their parents (and the government) to pay for things. If it were a separate charge, they’d have to pay for themselves. Doesn’t help the kids without parents that have the money to afford it.

              1. buildings and a much nicer gym

                THIS. Visit most campuses in the US and the sheer magnitude of capital expenditures is amazing.

                1. Heck, that’s true of my kids’ high school. It has an auditorium that’s probably more expensive than all of the schools I attended, K-12.

              2. I think the fees are an end-run around Florida Pre-Paid, because they are, of course, exempt.

                1. Ah, the end-run definitely makes sense.

                  At least with room and board inflated costs, people can opt out.

                2. Yep. So is differential tuition. Prepaid covers tuition increases made by the legislature; if an individual university increases it beyond that prepaid won’t cover it.

        3. Ha! I have four of my own!

          That certainly explains why you hate children.

    2. If they were going to do something serious, they would limit loan eligibility based on the choice of major, not based on which schools are “good” schools (as defined by the powers that be).

      I would love to see loan eligibility restricted for non-STEM fields. Why are we (as a society, in the parlance of the left) lending people money to go study socially useless topics? Why dont “we” only provide them money to go acquire skills that will provide them jobs and make them taxpaying citizens?

      If the private sector was doing this, it would be nearly impossible to borrow money to study liberal arts.

  2. OT: Mitch Connor arrested for stalking J-Lo.…

    1. Is that a South Park reference, or was that the guy’s actual name?

      1. Turns out the guy watched South Park, saw those episodes, and thought he could impress J-Lo by stalking her and dressing up as her. He’s like a modern day John Hinckley, Jr.

  3. Turning down the credit spigot [from the government] would force schools to compete by bringing prices down.

    This is well beyond the Obama team’s economic comprehension level.

    1. They understand it perfectly well.

      Their scheme is designed to (a) to keep the bux flowing to the “right” institutions (read: establishment proggy-infested schools) while putting pressure on those who aren’t meeting their standards (which will be applied in a totally objective and nonpolitical way) to become more proggy-infested incubators for Total State apparatchiks.

      1. I wonder how my school will fair. Its a state school, so you think that would help. Graduates with high income, ditto. But not a single BA degree offered.

        Every undergrad degree is a BS, including some that are commonly BA degrees elsewhere.

      2. So much of this house of cards would collapse if voters would realize fully how much all of these Big Spends serve the sole purpose of giving cash to cronies.

      3. And as long as they phrased it as a tax deduction for individuals spending money only at the “right” institutions, a bunch of posters here would have no problem with it, even if tuition to all the “wrong” schools was still taxed, right?

      4. to keep the bux flowing to the “right” institutions (read: establishment proggy-infested schools

        If one believes in the value of technical degrees, one outcome might be that the technical schools (i.e., engineering/math) would get good rankings, but either way it is more difficult to infest the curriculum with progressive ideals than at, say, a school known for its economics program.

        1. What makes you think that “technical” schools will get better rankings?

          Especially when there is so much opportunitiy to bias the complicated ranking system to favor institutions that support your political agenda?

          1. In general, the technical degrees are not ‘worthless degrees in bullshit’. They generally have the ability to generate an income sufficient to pay off a loan. But, as I said, even if they don’t get better rankings, the technical schools will produce graduates who have marketable skills…a more important metric than some convoluted ranking scheme. And technical subjects, generally speaking, are less subject to ‘bullshit’ being introduced into the curriculum. For instance, planes built using propaganda, rather than math and science, don;t fly very far.

  4. I dont see how those two ideas are in contradiction either.

    They both are driving up college prices.

    1. Indeed. The colleges may be “non-profit,” but they spend that money on nice shiny buildings and the like.

      The Pell Grants probably don’t increase tuition much if at all; you can get away with subsidizing the very poor. But you can’t really subsidize everyone, so the middle to upper middle class stuff almost certainly does raise tuition.

      1. The Pell Grants probably don’t increase tuition much if at all;

        Sure they do; simple supply and demand. They increase the pool of buyers for a relatively fixed supply. You do the math.

        1. Supply isn’t that fixed at colleges and universities; there’s wiggle room. College teaching is much more of a relatively high fixed cost, low marginal cost industry; the addition of a few people who were in no way going to afford the average cost doesn’t increase tuition.

          College tuition is not set by costs so much as set by universities capturing the additional lifetime revenue. It’s thus mostly set based on the broad experiences of the middle class; they’re much more able to raise tuition to correspond to benefits that are available to most.

          I take part of my original statement back, since the percentage of students receiving Pell Grants has increased quite a bit in the last 15 years, especially since 2008, probably enough that they do have an effect. I didn’t realize the current numbers.

        2. The Pell Grant as it used to be probably didn’t impact much. Now that it’s morphed recently into a program aimed at the lower 40 percent (?! I did not know that), it almost certainly does increase tuition.

  5. right-wing moralist and notorious gambler/dick/hypocrite Bill Bennett

    Of course, to call him a “hypocrite,” one would have to find some evidence of Bill Bennett opposing gambling. I don’t think anyone did; not surprising, since he’s Catholic. Consider how in all the small towns, the Protestants used to cluck their teeth at those Catholic churches with their bingo nights.

    But I’m sure all those religious types look the same.

    1. small towns

      Big cities too.

      1. Almost surely true, just something I have less personal experience with.

  6. How long before the government runs out of money and goes after the colleges the way the Protestants and later the French Revolutionaries went after the monasteries? I give it 20 years tops.

  7. Note that these rankings will be based on the following factors: “access, such as the proportion of students receiving the Pell Grant for low-income students; affordability, such as the average amount students pay, and the average debt they take on; and outcomes, such as graduation rates and graduates’ earnings.”

    This has got to be an even dumber list than US News uses, with far greater incentives to cheat. And learning of course is no where to be found on this list.

    1. I’m actually not totally against the idea of not trying to have some (inevitably biased) way of determining what people learned, and just using graduates’ earnings and so forth as part of it.

      1. You can’t have a proper market without the consumers having good information. But I don’t know how you ensure that in the college market.

      2. earnings may be ok. graduation rates are subject to huge manipulation.

        and note the feedback loop on the first two criterion- schools ranked more highly because they have more kids on pell grants and receiving other aid are eligible for larger grants and more aid, with which they’ll look even better on this stupid ranking.

    2. “Number of minority students.”

  8. On the one hand PResident 0 says higher education is the road to better incomes for middle class ‘volk’.

    On the other hand, he says the nation needs to rebuild it’s manufacturing jobs. So, we really expect a bunch of college educated factory workers?

    1. higher education is the road to better incomes

      Tell that to the millions who have graduated since he took office, weighed down with debt in a shit job market.

      1. They got the wrong degrees. The problem is that government subsidies and the idiotic “follow your dream” ethic that we have imparted to our kids has prevented people from reacting to market signals. It is really cruel when you think about it. We subsidized worthless degrees and then sent cultural messages to kids to ignore their heads and go get them.

        1. They got the wrong degrees.

          Yeah, I’d advocate for a greater emphasis (from the bully pulpit, not from the federal treasury) on vocational training in all this speechifying. Continuing education seems like the path to success whther it comes via Higher ed/Voc Ed/Apprenticeships or YouTube videos.

          1. Right now tax payers are paying for state schools to run all sorts of programs in women’s studies or screen writing and such that give their students little or no hope for a job on graduation. It is horrible on a ton of levels. First, when the public singed up to create state subsidized colleges they did it to ensure the state had a proper supply of doctors and nurses and teachers and such not to produce graduate level puppeteers and feminist literary critics. But that is exactly what they are paying for. And on top of that your state school is running a fraud scheme where by students go thousands of dollars into debt to get a worthless degree that does nothing but subsidize the lifestyles of a privileged class of professors and administrators.

        2. Yes, but since it takes at least four years to earn an undergrad degree, by the time one graduates the market and its labor needs probably has already moved on. So, your point is moot.

          Secondly, there is no such thing as a “worthless degree”. Higher education is not mere voc-tech training for the military-industrial complex. Besides, thanks to our system of free enterprise, one is free to be an entrepreneur. Have a Classic degree? Maybe you can start a business that researches ancient Greco-Roman music and musical instruments and record and sell albums of this music.

          One shouldn’t be held back by your (collective) lack of imagination.

          1. Higher education is not mere voc-tech training for the military-industrial complex.

            If it is being subsidized by the tax payer it is. If you want to get your degree in Greek popular music, have fun. But that is not why we created state schools. There is something to be said for having a steady supply of engineers and teachers and doctors and such. There is nothing to be said for tax payers subsidizing the bohemian dreams of middle class hipsters.

            1. That’s a different argument that what you were making before.

              I think we both agree on the need to separate school and state.

              1. Yes we do. And if we stopped subsidizing college, students would start reacting to market realities better.

                1. Indeed. By the way, the president of my university (along with his wife, the first to go to college in his family, working-class immigrant, blah, blah, blah) is spearheading this program that will award an associates for only 2,500 a year.

                  1. I don’t see how the rise of the internet isn’t going to make college and job training much more affordable and better. The money should be in giving the test and accreditation not the actual teaching, which should be very cheap.

                  2. I remember going on job interviews after getting my associate’s in 1985. The job ads said Associate’s Degree minimum, and if the employer was kind enough to respond to my resume I was invariably told that I had no chance in hell of getting the job because people with 4 year degrees AND experience were applying and interviewing. At one interview I said “Sounds like job hoppers – you’ll be looking to fill the same vacancy 12 months from now.” At least he was honest: “Nope, I won’t be, I’ll be out of here before then.”

                    1. I never understood the obsession with finding employees who will stay forever. You never know how long a person will stay in a job. You should hire the best person for it and not worry.

            2. There is something to be said for having a steady supply of engineers and teachers and doctors and such. There is nothing to be said for tax payers subsidizing the bohemian dreams of middle class hipsters.

              John is rocking this thread today.

          2. Yes, but since it takes at least four years to earn an undergrad degree, by the time one graduates the market and its labor needs probably has already moved on. So, your point is moot.

            But there are some subjects that people should have recognized all along as not meeting the job market, like the various flavors of trendy identity studies and of pomo/decon gibberish.

            Higher education is not mere voc-tech training for the military-industrial complex.

            No, but nor is it mere finishing school for trustafarians, or at least I didn’t have that luxury.

            1. but nor is it mere finishing school for trustafarians

              About a 1,000 years of history of Western civilization would disagree with you there.

              Jus’ sayin’

              1. Because we still live under those socioeconomic conditions.

              2. Government-backed student loans are a realtively new phenomenon.

                The 1000-year history of western civ is about rich families sending their second sons off to church-run universities to become priests.

        3. This.

          Totally right. We subsidize all education equally, regardless of whether it gives kids useful skills or not. Thus eliminating the market signals favoring STEM fields that would exist if the private sector was making the loans. There’s no connection between the question of whether we’ll give you a loan or not, and whether we think you’ll ever be able to pay it back.

    2. SKILLED LABOR, y’all!

  9. 11 percent of a family’s income seems like a pretty low number. Aren’t most public universities around 20k a year for tuition and board?

    1. My school, for in-state, is $7700 in tuition for this upcoming year, however, there total estimated cost is $22k.

      Add nearly $20k for out of state.

      The out to in ratio was 3:1 in my day, now about 4:1. I dont think with todays prices, I would have been going there.

      My first year, tuition was about $5100 out-of-state.

      1. their total estimated cost.

  10. “Highly sophisticated” ratings = corruption. This is simply a scheme to funnel even more lobbying money to the right people, as well as ensure universities’ ideological compliance. Not that there’s much ideological deviation, as it is.

    Everything our presidential jackass touches turns to totalitarianism.

    1. Exactly. No limits on money for progressive activists to lounge about on liberal arts campuses studying gender and oppression. Plenty of limits on borrowing money to study computer programming at a for-profit university.

  11. US News & World Report puts out rankings ever year in multiple categories. It may or may not be biased, but I don’t see the dog in teh fight for the magazine.

  12. my buddy’s mother-in-law makes $60 an hour on the computer. She has been out of work for 7 months but last month her paycheck was $14249 just working on the computer for a few hours. Read more on this site,….

  13. tie federal student loans to highly sophisticated ratings about how worthy various schools are to receive this largess.

    So, basically, you’ll still be able to borrow $100,000 to study underwater basket weaving as long as your doing at Amherst.

  14. I’ve gotten bad. My wife and I walked into our bank this morning and there was footage of Obama making this speech on a telly behind the tellers (can you go anywhere that doesn’t have TVs today?) The sound was off but I caught a couple of the captions. Before my head exploded my wife preemptively and knowingly said, “Look away, just look away.”

    I mean you don’t have to be very intelligent to know exactly what he’s going to say about any subject whether domestic or foreign affairs, economics, race, etc. ad infinitum. He really is a one trick pony and he’s not very good at that one trick.

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