More on President Obama’s new plan to
capture the attention of young voters while also just happening to mention that health care law for which they should really sign up, by the way try to help guide the country’s tuition inflation problem on a downward trajectory. House Education & Workforce Committee Chairman John Kline was skeptical that the proposal will really amount to all it’s cracked up to be, and warned of the economic dangers of more federal intervention in the education market:
While I am pleased the president’s new plan recognizes the importance of promoting innovation and competition in higher education, I remain concerned that imposing an arbitrary college ranking system could curtail the very innovation we hope to encourage – and even lead to federal price controls. As always, the devil is in the details, and I look forward to examining the president’s proposal further as part of the committee’s ongoing efforts to reauthorize the Higher Education Act and help improve college affordability and access.
And as I argued yesterday, the administration’s supposedly competition-focused proposed solution to tuition inflation and ballooning loads of student debt really just tiptoes around the edges of the underlying problem without actually getting at it — the underlying problem, of course, being the cheap and easily attainable federally-subsidized students loans that influence students’ decision-making as well as heightens demand. Richard Vedder at Bloomberg explains that a few parts of the plan might be good in theory, but it still isn’t fixing and might even be worsening that rather glaring hitch:
The president’s proposal has one very bad idea: a forgiveness boon for those paying off loans right now. The proposal, limiting loan payments to 10 percent of income, potentially relieves millions of students from repaying part of their obligation. So why not major in fields the economy values least — anthropology or drama instead of engineering or math — if you don’t have to worry about earning enough to pay off your student loans over a certain period?
The idea simply raises incentives for future students to borrow more money, if they know their obligation to pay it back is capped. That, in turn, allows colleges to keep raising costs.
Obama proposes to ignore or worsen the root cause of much of the explosion in student costs: the federal financial assistance programs that encourage schools to raise costs and that haven’t achieved their goals of providing college access to low-income Americans.
Vedder explains another side effect wherein the plan could actually kill the educational innovation that it claims to want to spur — just like so many of the Obama administration’s other grandiose economic schemes that may have had lovely intentions but in practice are fraught with unintended consequences. As Charles Krauthammer put it last night, is “the federal government not intrusive enough in all other areas of our life and now it’s going to regulate graduation rates? … I think there are things that ought to be organic and independent and higher education is one of them.”