I see that a number of leading Democrats are encouraging Joe Biden to cancel up to $50,000 per person in student-loan debt.
I’m tempted to say, “Go, Joe, go.” I have two daughters who are stuck with big payments for college loans and I’m sure they’d like to start off with a clean slate.
But if we’re going to clean that slate, then let’s go all the way. Let’s attack the root cause of all that debt.
That’s inflation in the cost of higher education.
The COVID-19 crisis makes this an ideal time to address that problem. As the old saying goes, every crisis also offers opportunity. And this crisis has given us an opportunity to envision how a college education could be provided much more economically.
An excellent example is Princeton University. A Star-Ledger article last week told how undergrads have spent the current semester engaged in remote learning. Most will be returning to the Mercer County campus for the spring semester, the article reported.
But one of them is not happy about it. An article on the Princeton Planet site tells how a sophomore by the name of Reid Zlotky has filed a federal lawsuit demanding a refund for at least part of the $25,935 in tuition he paid for the semester.
The plaintiff’s lawyers filed a brief stating that Princeton “is saddling wholly innocent students with mounting debt as a result of having to pay tuition and fees for services they are not receiving and facilities and services that are not being provided.”
The suit raises a question every parent should ponder: How can colleges charge such atmospheric fees for imparting knowledge that could be imparted much more economically online?
With Princeton, of course, the student gets the prestige of attending one of the most exclusive universities in the country. But why is it so expensive?
As recently as 1992 the tuition at Princeton was a mere $8,275 per semester. If tuition had grown at the rate of inflation it would now be a mere $14,173 per semester.
The same is true for colleges all over the country. A progressive think tank called Demos recently did a study titled “When Congress Went to College: Comparing tuition then and now at our elected officials’ alma maters.”
“What we found was striking, but not surprising,” the authors wrote. “Current students face college costs that dwarf those paid by the very elected officials tasked with tackling the problem.”
A key factor in the rise of college costs has been the wide availability of student loans – as well as a dirty trick Congress played on college students back in 1976.
That was when Congress passed a law saying that student-loan debt, whether public or private, could not be discharged in bankruptcy except in the most extreme circumstances.
That led the lenders to make a whole lot of loans they would not otherwise have made. And now there’s $1.5 trillion in student-loan debt out there, much of it owed by people whose incomes are threatened by the COVID-19 crisis.
In a separate report, the people at Demos support large-scale forgiveness of student loans.
“Canceling student debt is an efficient, simple, way to get relief out the door,” the report states.
That would be popular with a whole lot of people.
“The number of Americans with student loan debt has skyrocketed over the past 2 decades, and now sits at 45 million,” the report adds. “It has more than doubled since 2004.”
That may be a good move politically. But then what? I discussed that with Murray Sabrin, who recently retired as a professor of finance at Ramapo University.
“This is the thing about human nature,” he said. “People like free stuff and benefits they don’t earn.”
But if we’re going to forgive the debt, then we can’t very well continue the system that created all that debt, he said. After experiencing remote learning last semester, Sabrin said he found it may offer a more economical alternative.
“It worked pretty well,” he said. “I never did it before but there were really no glitches. You get to see the students up close and personal on your computer.”
The students, of course, may not like it quite as much as the professor.
“There are a lot of benefits to it, but the downside is you’re not in person,” Sabrin said. “Between fraternities and sororities and clubs, students want to meet other students.”
Yes, they do. But if the current mountain of student-loan debt gets paid off, is the federal government going to build another mountain to fund the next generation of students?
That’s the question the Congress needs to ponder before they screw this up again.