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.
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.