I was just sent a Time magazine article on student loans. It’s pretty grim. This year the amount owed on student loans will go over 1 trillion, dollars. It already exceeds the amount owed on credit cards. Even in the Obama era, that’s a lot of money.
I got the article because I’m a Trustee at Mid Michigan Community College. At Mid student loans and Pell grants are a big deal for us. We’re almost entirely dependent on tuition for our funding. We’ve never had a millage pass and the property tax base of Clare and Gladwin is beyond low. So to keep on offering low cost higher education to this area we have to rely on tuition, and tuition is dependant on loans and government grants.
The Wall Street Journal had already called student loans a “disaster” back in September when it reported that student loan defaults were up to 8.8% this year up from 7% from 2008. Actually they’re higher than that but the government uses several repayment options that are really defaults dressed up as repayment. It’s costing taxpayers a billion dollars this year, and it’s going to go up since the Federal Government took over student loans last year from private lenders.
Student loan debt is like so many problems this country faces. It can’t be solved as things are currently structured. There is simply no politically feasible way for Colleges and Universities to control their costs. Like health care where there are no upper limits to what can be charged for a necessary service, the cost of education keeps going up because we lack the will and the means to stop it climbing. The result is that all efforts in education and health care are aimed at finding new ways to feed the monster, not limit what it eats.
Put simply, if a college gets more money, its unions demand that the money be spent on higher wages and benefits. That’s why, as the Journal points out, the cost of education is going up even faster than health care. If Blue Cross or Medicare pay more money than hospitals charge more money. Both will spend every cent they have and demand more. Without caps on what can be spent there’s no incentive not to spend. And they do. And the crisis continues.
When the automobile industry ran its wages up to the point where they couldn’t compete with the Japanese they lost market share and eventually had to shrink and take government handouts. I suspect that we’re very close to that point with the cost of education.
This Time article points out that people are paying $ 53,000 a year to go to…get this….Tulane! Not Harvard or Yale, Tulane! If you want your daughter to go to Barnard and major in whatever they major in there..art history or antique shop management, you’ll have to pay $55,566 a year. That’s serious money for everyone except the super rich. Those “millionaires and billionaires” that Obama carries on about.
What do you get for these enormous amounts? Well, your kid gets to be on a first name basis with the people that will shortly be running the country. Tommy Lee Jones, the actor that usually plays rough hewn Texans, went to Harvard. His roommate was Al Gore. Robin Williams roomed with Christopher Reeve. Joe Montana with Charlie Weis. How much is that worth? Well, if you plan on being part of the ruling class in Washington or Hollywood or sports, it means plenty.
How about the rest of us? What do college kids in Michigan get for a hundred thousand dollars in debt? That depends. At Mid we give our students the first two years of a Bachelors Degree. It’s the same as the first two years you get at any large university. If you don’t want that we’ll teach you how to be a nurse, or rad tech, or a welder, or to design and build houses. We’ll teach you how to be employable in two years.
If Michigan students want to spend four years in “specialized studies,” or “global studies, “ or “documentary filmmaking,” they’re not going to get much. We can teach you these things, but that doesn’t mean anyone wants your skills. Modern education demands sophisticated buyers. If you want to buy worthless fluff there are schools that will sell it to you. Then you can go to New York, live in a tent, and demand that we forgive your student loans because you can’t find a job.
I suspect that we’re headed for a serious crisis in student loans. We’ve already passed the time when we could afford to get sick, go in a nursing home, or get arrested without the government picking up the tab. It looks like another necessity is about to become another another open ended government entitlement with the taxpaying 50% of us picking up the tab.