[This is the transcript of my regular KVMR radio commentary broadcast on 6 July 2012.]
The amount of federal student loans outstanding today stands at over one trillion dollars – that’s with twelve zeros, or a million million. And yet we keep pouring taxpayer money into government programs operating under the wrongheaded philosophy that everyone with a college education is automatically on track to have a better economic future, achieve the American Dream, and contribute needed skills to society. The truth is far from this commonly purveyed propaganda.
Those who have studied the federal government’s efforts in designing and funding educational and training programs know that this record is dismal in all areas save one – and that is military training and the GI bill. The educational and training programs of the US military are still unmatched in the world. However, there are ongoing progressive efforts to bring that quality into line with what has long been wreaked on our civilian population. For an overview of that damage, one need only read the studies done by the Heritage Foundation and Cato Institute. (also see Addendum)
But tonight I want to talk about the latest area of federal blundering in education – the student loan programs. First and foremost to keep in mind is that decades of increased spending on education have yet to show any significant increase in student performance. With this reminder I want to bring to your attention some unintended consequences of the federal student aid programs that were recently presented by Professor Richard Vedder in a talk at Hillsdale College. Vedder is the Edwin and Ruth Kennedy Distinguished Professor of Economics at Ohio University, and director of the Center for College Affordability and Productivity.
First, we have the loans being issued at unrealistically low interest rates to students with little or no appreciation for the economics involved. This has made the entire program into a commons which is being consumed to its destruction – recall the $1T of growing debt.
Second, the loans are granted in the same manner as those of the recent real estate fiasco. There is again no connection between interest charged and the risk of repayment. The ethnic studies student at Podunk U pays the same low rate as the MIT engineering student.
Third, the loans promote runaway costs of higher education because the schools swoop in to raise tuition and fees in response to the government’s desire to increase student loan amounts. This vicious and insane cycle has been going on for decades, with the students not caring and the taxpayers ignorant of the whole matter.
Fourth, the entire manner of operating the student loan program has become a government nationalized monopoly under President Obama. There is no impetus to improve either the quality of the loans, or the costs involved in granting and administering them.
Fifth, the government increases its costs and encroaches on students’ privacy by asking for too much personal information. For example, a Pell grant application requires the answers to over a 100 questions.
Sixth, the easy availability of federal money and the myth of value give rise to schools admitting and graduating way too many students with unwanted majors. About 54% of graduates today are un- or underemployed with, for example, 107,000 janitors and 16,000 parking lot attendants with bachelor’s degrees working to pay off horrendous amounts of student debt.
Seventh - out-and-out fraud. Easy money and poor study habits tempt many to take their student loan money and pursue other interests with it.
And finally, the lazy and inept are rewarded more than the hard-working and capable. A student who takes six years to complete a degree gets twice the Pell grant money of the student who blasts through in three years.
It’s worth a moment to consider this as another area where government bureaucrats have screwed the country and its taxpayers. And we want to grant that same outfit more power to regulate and control our lives?
My name is Rebane, and I also expand on these and other themes in my Union columns, and on georgerebane.com where this transcript appears. These opinions are not necessarily shared by KVMR. Thank you for listening.
[Addendum 10jul12] If anyone still has doubts that our public educational system is broken, take a look at what has been happening to California's public institutions of higher learning. These palaces of progressive policies have run amok in more ways than one can count. Russ Steele's NC2012 features a short video here that spells it out.]