Neal McCluskey, of the CATO Institute, is right to say that government-funded aid for college tuition is right for politicians and their academic friends, not students. College tuition has absolutely skyrocketed side-by-side with the increase in government spending on college tuition assistance programs. This is deja vu all over again. McCluskey recently wrote:
Federal aid for college students, it’s really no secret, is driven by what works politically, not what’s best for students. While logic and evidence strongly suggest that aid mainly enables colleges to raise their prices at breakneck speeds, politicians talk nonstop about aid making college “affordable.” Financial reality simply does not trump appearing to “care.” But on Friday, the Obama administration appears poised to take aid exploitation to a new level.
As McCluskey noted, tomorrow the President will be hosting a campaign-style event featuring “lots of no doubt somber – but oh-so-grateful-to-the-President – looking college students.” Barack Obama will portray himself to be the defender of all students in pursuit of knowledge against that despicable Congress who is – for no good reason of course – set to allow the doubling of interest rates on subsidized federal loans from 3.4 percent to 6.8 percent.
What Mr. Obama will not include in his pathetic campaign-style speech, is that House Republicans have already done something, and unfortunately, it greatly resembles what the President will call for.
Last week, House Republicans passed legislation that would peg student loan interest rates to 10-year Treasury bills, and actually caps rates at 8.5 percent or 10.5 percent contingent on the type of loan. The President, however, is opposed to how the rates will vary over the life of the loan. Instead, he would have them set at the origination rate, and the Republican plan includes T-bill rates that are slightly higher due to an add-on. Aside from that, the plans are pretty much the same.
The point McCluskey was trying to make, and I would add to the argument that this is the same logic that got us into the sub-prime mortgage crisis, is that Obama should be negotiating, not pandering. He must know what is right, and the consequences from misguided bubble-prone policy.
But he doesn’t. And should we expect anything else from a man who represented a slum lord who threw out poor black-American families into the street in the middle of the Chicago winter; and yet, just a few years later sued the banks for not providing loans to people who could not pay them back.
It is simply about political expediency, not policy, or even the potential for economic devastation for that matter. He, and other progressive politicians in both parties, already proved perfectly willing and able to pretend they have win-win solutions for people in need in a zero-sum situation.
Again, and I will beat this drum everyday in this blog as I did in my book, that is the nature of government and it is nothing new. They do not care about your home, your education needs, or the consequences of their policy; they only care about your vote and what they think to be their office of power. But we are getting what we deserve if we allow another bubble, which many believe is already inevitable, and it dwarfs the amount of red ink that was present in the 2007 – 2008 collapse.
To close with McCluskey:
If ever there will be a blatant, inescapable demonstration of what really drives federal aid policy, it will be the event we are likely to witness tomorrow. Let’s hope the public will get the right message: Politicians aren’t primarily driven by a desire to make college affordable. They’re driven by a desire for political gain. And that’s why we need them to get out of the student aid business.
