On February 16, Richard Vedder, an adjunct scholar at the American Enterprise Institute, wrote an opinion article for the Wall Street Journal entitled, “How to Beat the High Cost of Learning.”
The article begins with the question, “How come a college degree is the one thing that never gets cheaper?” Since 1980, the price of a college education has risen faster than inflation and the growth of family incomes. Mr. Vedder concludes that the way to address the problem is to re-think the entire government student loan system.
From 1840 through 1978, a period when federal aid was almost nonexistent, tuition rose about 1 percent a year. If tuition after 1978 kept pace at the 1 percent increase instead of rising at 3 percent, the cost of going to school today would cost half of what it does.
When aid was expanded, money was easier to get, people applied and schools throughout America raised tuition and fees aggressively. Everyone thought a college degree, any degree was the ticket to a high-paying job, which we have now found out is not the case.
I have long thought that colleges and universities should have to disclose (as financial institutions do) all the cost associated with earning a degree and what the pay prospects are for all degree programs. Engineering and business degrees will provide a good income. Women and Black studies provide almost no income, although they cost as much as their counterparts in business and engineering.
I also think that when school officials talk a naïve 18-year-old into borrowing thousands of dollars for a college education, they also have a responsibility in making sure the individual stays the course and completes the degree requirement. To make sure this happens, schools should have to setup a financial reserve for all loans they so eagerly talk persons into.
The way it would work is – if one does not graduate in six years, they can apply for a refund of some of the cost. Also, if you cannot find a job with the degree earned after some time, the reserve can be tapped for a refund. Such a program would cause school officials to assess who they talk into applying for a loan and forcing schools to get rid of foolish degrees and their faculties.
Mr. Vedder writes that some $158 billion is spent annually on student aid and more than 40 million Americans have student loans. Total student debt has reached $1.3 trillion. Loan delinquencies are huge and the number of student debtors older than 60 has quadrupled in a decade. There are many seniors who have their Social security payments debited to repay previous loans. This problem is very detrimental for society.
Mr. Vedder calls for simplifying the system to grants and loans. He also calls for giving educational vouchers directly to students that would empower the recipients to weigh cost more closely and reduce colleges’ incentive to increase spending.
Mr. Vedder takes part of my argument in that schools also need to have some skin in the game. Many colleges now knowingly accept marginal applicants who ultimately drop out and fail to repay their loans. The schools collect tuition, but the taxpayers get the bill. Schools should share in the burden. As an example, schools with high loan delinquencies should have to pay a tuition tax to the government to cover costs. That would help to raise graduation rates and shrink bloated enrollments.
Almost all aspects of education need reform. Student aid is but one important area. Unfortunately, as long as education is controlled by Democrat officials, don’t expect serious reforms to come soon.