Student Loans

Elizabeth Warren's Plan for Free College Tuition Would Punish Hard Work, Increase National Debt

Americans are paying more than ever for car loans. Why shouldn't the government bail those out too? For the same reason eliminating student loans would be a bad idea.


Americans need a car in our road-dependent society, but the cost of the average vehicle has soared into the mid-30s. Payments are pushing $600 a month, leaving many people strapped to afford housing, food and other necessities. The simple answer is for the feds to pay off their car loans and provide free vehicles to everyone who wants one.

Before you hit send on your angry email, realize that I'm making this modest proposal with my tongue planted in my cheek and just for illustrative purposes. Sometimes it takes an absurd idea to illustrate the stupidity of a serious one. These days, Democratic presidential candidates are touting their plans to forgive most student debt and to provide wannabe college students with "free" tuition. They appear to be completely serious about it.

Former students crushed by loan debt might find the idea appealing. It also sounds great to families with teenagers who are approaching their college years. Recent surveys show broad public support for the plan floated by Sen. Elizabeth Warren (D–Mass.), who has vowed to cancel student loan debt up to $50,000 for lower-income students and tax billionaires to fund the $1.25 trillion cost for making tuition at public universities complimentary.

But this column isn't about debt spending, which is a huge problem but one that makes the public's eyes glaze over. In March, the federal government racked up the largest monthly budget deficit in history ($234 billion) and federal debt levels have soared to $22 trillion. Most of us can't fathom a trillion, which might explain our society's collective shrug even as we are busy spending our grandchildren's inheritance.

Instead, this column is about the unforeseen consequences of doing morally hazardous things. If the government wiped away Americans' car-loan debt, it would reward people who spent 70-large on one of those leather-clad monster trucks with a pickup bed used mainly for trips to Ikea. It would punish people who had more impulse control, squirreled away savings, and chose to get around in a 12-year old Civic or the Metro bus.

The Warren plan would hike demand for vehicles, which would first lead to shortages and then to rising prices. If other people are paying, why save up or shop on Craigslist for a beater? Inflation is a problem mainly in industries where there are third-party payers (insurers or government), such as health care. We don't comparison shop for that colonoscopy.

As usual, political leaders are great at pinpointing a serious problem, and then coming up with solutions that will make it even worse. Student debt levels have hit $1.5 trillion. Analysts have warned of a student debt bubble. I agree with writer Robert Farrington, who noted in Forbes that it's unlikely to pop: "In the housing crisis, if a borrower struggles to pay their mortgage, the bank can foreclose on their house." But banks can't repossess a college education, so it becomes a years-long drag on household spending and the economy.

Easy student loans and vast amounts of state and federal subsidies have turned into a funding spigot for public and private universities, which—and this should be no surprise—have not always spent the money wisely. The free-flowing cash caused universities to create Byzantine administrative bureaucracies. Check out the size of the University of California's Office of the President.

It enabled them to construct new departments specializing in potentially interesting but questionable pursuits revolving around race, gender and sexuality. I'm skeptical that many people would pop for a $200,000 degree on the sociology of surfing or oppression studies if they were paying from their own bank account. Fortunately, Walmart always seems to be hiring.

In the 1990s, universities went on a spending binge just as government started expanding its student-aid programs. They built luxury dormitories and fancy student centers. Texas Tech built an enormous leisure pool with a centerpiece 645-foot-long "lazy river," as The Atlantic reported last year. Money is fungible, and such unfathomable binges are the result of flowing government cash and students who pay their tuition on the installment plan.

Free college only will exacerbate these problems. It will crowd out serious students—and seriousness is best measured by people willing to invest in their own future plans—and discourage people from choosing cost-effective strategies such as community college or pursuing a skilled trade or vocational field. As a parent, I understand the predicament that students face. They need to find a way to pay for tuition, but the best public-policy solution is to put a damper on the subsidies that fuel the inflation, not dump more cash on the fire.

Americans can't see the absurdity of giving away free stuff when we're talking about education, which is why I decided to discuss the price of cars. So what kind of SUV will you and your neighbors buy if taxpayers are paying the freight?

This column was first published in the Orange County Register.

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  1. There’s this thing called moral hazard. I’ve met creationists who understand moral hazard. Elizabeth Warren may need a scientist to explain to her that a good reason not to take on too much debt is because of the negative consequences, but the rest of us shouldn’t.

    Wild animals learn from their mistakes. They can even learn to avoid them from their parents. There’s a certain amount of moral hazard involved in voting for people like Elizabeth Warren, too, and that’s a good thing. There should be negative consequences associated with voting for politicians who are dumber than creationists and wild animals.

    1. Elizabeth Warren may need a scientist to explain to her</blockquote.

      "Needing an explanation" requires an ability to reason and think; Elizabeth Warren needs explanations like a fish needs a bicycle.

      there’s a certain amount of moral hazard involved in voting for people like Elizabeth Warren, too

      That’s nothing compared to the actual hazard of voting for someone as ignorant, incompetent, and dishonest as her; she’s worse than even Hillary.

    2. “I’ve met creationists who understand moral hazard.”

      I resemble that!


      No, I have an Economics degree. I also know what “Almighty” means (in as much as I can at this age).

    3. Bring back McCarthyism and start herding dangerous Marxist subversives like Warren into GitMo. Really, enough is enough.

    4. Just another far fetched idea from Pocahontas. Be nice if her small brain could think up something that actually was feasible and helped ALL the American people instead of always just the minorities! She could start by taking a pay cut from the one class she teaches at Harvard and is compensated $400,000. Take $100,000 and try to get by on that Liz and give the rest to your causes…it’s called leading by example!

  2. “Wild animals learn from their mistakes”
    Well, the ones that actually survive do – – – – –

    But is taking a four year vacation at a luxury resort for free really a mistake? Sure, you have to ‘be poor’ for the next 10 or 20 years, but in the four years of pleasure, you learn how to game the system for even more free stuff. How to adjust your income down to qualify for rent assistance, health care, etc. You learn not to marry, because then the two or three of you can maximize government handouts, and actually live pretty well. After all, lobster is covered on the SNAP program.

  3. Americans need a car in our road-dependent society, but the cost of the average vehicle has soared into the mid-30s.

    In the US. In other places, without all the onerous regulations, you can get excellent cars for 1/3 of the price. There is also a good deal of hidden inflation contained in that price.

    1. Cars in the US have multiple airbags, seat-belt pretensioners, reverse cameras, anti-lock brakes, automatic transmissions, side-collision avoidance sensors, automatic headlights, in-dash (and elsewhere like headrests) entertainment systems…and seating for 18.

      But you can spend WAY less than mid-30s for basic around-town transport.

      2019 Nissan Versa S Sedan | Price: $13,255

      1. I bought a Versa once — worst purchase ever. At least it was cheap. Rated 41st out of 41 4-door sedans. On the plus side, it’s brought me closer to God — I pray for my life and soul every time I have to merge onto the freeway, hoping it can accelerate in time.

        But the point is still valid — you can buy a perfectly driveable Accord or Camry for under 25K. No need to spend 55K on a GMC truck or Buick SUV.

  4. Fortunately, Walmart always seems to be hiring.

    Not in Warren’s America, that evil corporation will be nationalized and the wait list for a roll of toilet paper will be 2 months.

  5. “feds to pay off their car loans and provide free vehicles… it takes an absurd idea to illustrate the stupidity of a serious one.”

    I don’t know. I think there’s probably a large portion of U.S. citizens that would get behind a centralized car distribution scheme in earnest. As stupid as it is, I think it might actually make more sense than free college.

    1. Free SUVs for all! And make them electric, so it’s green!

      And they will even be cheaper, since we will be able to buy them from Canada! And the government can negotiate the prices to a reasonable maximum!

  6. How about mansion and yacht loans?

    Mine are really killing my ability to loaf and invite my soul.


    Someone pays for it.

    1. As long as it’s being paid for with OPM*, who cares?

      * Other People’s Money.

  8. ________’s plan for ________ will increase the national debt

    That shit just goes without saying.

    1. +1

  9. I fully support taxing billionaires to pay for all of my firm’s business expenses, including employee salaries, so I can keep all of our receivables as pure profit. I am sure that a Gallop poll will find that 99% of business owners would share my view. It’s funny how proposals to take money from people we dislike and give it to us always seem to be popular.

    PS – the billionaires I’d start with would be those found or formerly found in the U.S. Senate. Like Elizabeth Warren and John Kerry.

    1. Given their myriad of crimes against the Republic and the American people I would imprison them permit trial and possible execution. Confiscating their ill gotten gains. Their wealth to be redistributed to good conservatives and libertarians as reparations for the horrible things they have inflicted on America.

      They should have no argument, as this touches on many ideas they cherish, including:

      Accusations serving as proof of crimes
      Punishing the wealthy for being wealthy
      Redistribution of wealth

      All these things should be pleasing to the progtards. Surely they will embrace my plan.

  10. Also, a lot of the support for the premise of free college is that “it works in the rest of the world.” But university in the rest of the world is very, very different than in the United States. First, there are much more difficult entrance exams (like A-levels in Britain or the Abitur test in Germany), so people who go to university are already much more prepared. Second, universities in the rest of the world do not have sports teams that need millions and billions of dollars to operate. Third, university education in the rest of the world is much more hands-off. Students are expected to go to the lectures and do the work with much less supervision. Free college could work in the U.S. if we completely overhaul what that college experience is.

    1. Na, we’re just gonna keep it the same and borrow from China to pay for it.

      Lets load up our children’s children with more debt, for the children!

    2. But…

      1. Tests are unfair and anti-equality.

      2. Most US commoners only know their local university in terms of spectator sports.

      3. Most US students expect coddling.

  11. Can we stop calling it “free?” It’s “tax-payer funded.”

    1. More like ‘tuition stolen from taxpayers’.

  12. As many others have commented, I doubt anyone who supports this “free” stuff expects or agrees to work much harder and accept less pay. I’m still waiting for those well-paid suburban teachers to tell their union “cut our pay and give big raises to those who teach in city schools.”

  13. this column is about the unforeseen consequences of doing morally hazardous things

    No it isn’t. It is one more Reason column that is an excuse to yell get off my lawn at the generation that is already being buried by the spending/lending distortions that makes ‘eyes glaze over’ and leads to ‘collective shrugs’.

    Does the younger generation really need hypocritical lectures about ‘moral hazard’ from older folks who clearly don’t know shit about that and don’t have the balls to DO shit about that?

    I agree 100% with the prescription here – get rid of those subsidies – but like a lot of things it ain’t as easy to just reverse direction as it was to get us into the mess because reversing direction also means forcing destruction of existing capital (much the same as eliminating mortgage deductions and letting banks go under). Which also means you need to offer more than platitudes about moral hazards and bootstraps.

    Now – get off my lawn.

    1. What makes you think Mr Greenhut doesn’t know shit about moral hazard and does nothing about it? It looks to me like he does what he can, likely more that you. You talk like he isn’t buried in the same debt younger generations are. Should he just shut up because it makes you angry for him to remind you and maybe others of things you don’t like. How about, if you don’t like it, don’t read it. as for your most important point. Don’t have a lawn, they are dumb.

      1. Well I suspect he is roughly my age – and no one of our age or older is in the same debt hole that we have buried younger generations in. We received the benefits of it. They’ll get none of that benefit – only the bill and for much longer.

        He’s not angering me by reminding me and others of what I don’t like. FFS. My whole point is that our generation has got to stop with the platitudes and cliches and happy talk and easy virtue signalling about ‘responsibility’ and easy diversion into political BS and the ‘do as we say not as we do’ lectures to the next generation. And FIX THE FUCKING PROBLEMS WE OURSELVES CREATE. Otherwise, why on Earth would anyone be expected to listen to a damn thing we say we stand for.

  14. How does it increase debt? It’s FREE!

  15. College education should be free – it’s an investment that pays for itself! Everybody knows college graduates earn more than non-college graduates, spend $100k on a college education and get back $500k in lifetime earnings – that’s a bargain.

    Now if you’re going to argue that you spending $100k on my education so that I can earn an additional $500k is a hell of a bargain for me but not so much for you, well, you’re just not collectivized enough and still cling to that extreme individualism Hillary talked about. It takes a village to decide that the nation’s wealth belongs to the nation as a whole and not to the individuals who earned it.

    And it’s not just the collectivists on the left who think America’s wealth belongs to America as a whole and if we decide to spend “our” wealth on free healthcare or free college or free unicorns it’s our democratic decision to make, there are plenty of collectivists on the right who think the same way. (One way to spot those people is to watch for those who talk about things like “our” trade deficit with China, for example.)

  16. Of course college would be more affordable if we didn’t pay doofus marxists a half million to teach one course.

  17. Just another bad idea from her pea-brain.

  18. One of the things that makes America great is that we make debt peons out of our poor smart students who aspire to lift themselves up by their bootstraps by getting a college education. The rest of the advanced economies, which are communist because they don’t make debt peons out of their poor, smart students, don’t bankrupt their students and so are NO model for America.

    Why? For one, people like me earn a healthy income from student debt via debt securities I own, and it’d hurt me if commies like Warren stopped it. Moreover, why should we who “have” be forced to help those who “have not?” That’s what communism does.

    1. I was a “poor, smart student” back in the day. My debts when I graduated were 80 percent of my first year’s (pre-tax) salary, a higher ratio than the average student today graduates with. I paid it off in under 5 years. It was money well spent.

      1. It was absolutely money well spent; well spent because guys like me got to spend it! Thank you! I wish more deeply indebted students felt as you do and saw paying the wealthy owners of the debt securities they’re paying off as deserving of their hard earned money.

        The other First World countries, and by that I mean Communist countries, that don’t make debt peons out of their poor, smart, aspiring students have no respect for us in investor class.

        When we’re done with Iran, as we’ve done with Iraq, Afghanistan, Syria, Yemen, etc., if we really, really believe in freedom and capitalism, we should next turn our guns on socialist-communist countries such as England, Germany, France, Canada, Australia, Sweden, Norway, etc. – countries that have socialized medicine, “free” education, lavish socialized retirement benefits and child care benefits, etc. The survival of any socialistic, er communistic, country threatens the freedom and prosperity of capitalist class.

  19. This is indeed a very complex plan. Which greatly complicates learning for students. My friend uses this plan in his studies. I think he can help you solve this issue.

  20. Let’s hope that plan works, otherwise, students will start buying to check the time.

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