By Willis L.
Krumholz
Tuesday,
September 03, 2019
Far too many pundits believe culture is upstream from
politics. That might be true, but bad policy is often upstream of culture. And
it is shocking how often Republicans use the “culture” trope as an excuse for
long-running inaction and lack of serious thought on needed policy changes.
One such example is higher education. Speakers such as
Heather Mac Donald have done an excellent job of highlighting examples of the
far-left bias that is prevalent at America’s higher ed institutions. Conservative
YouTube channels are great at highlighting the perils of conservative speakers
attempting to speak on various campuses.
But few address the elephant in the room. Taxpayers are
heavily subsidizing the entrenched and blatant anti-American and anti-Christian
bent in our colleges and universities.The huge budgets of these colleges — and
their ability to pay professors well over six figures to teach for only several
hours a week, only during the school year — is entirely the result of choices
our elected officials have made.
The Predictable Rise of
College Costs
It started in 1965, when as part of Lyndon B. Johnson’s
fateful Great Society, Congress passed the Higher Education Act. Among other
things, the legislation introduced subsidized student loans to increase the
number of Americans attending college, and it has been reauthorized multiple
times since. Ever since, the terms of those loans have become more generous
(the subsidization has increased).
The effects have been predictable, and many did predict
them. For example, Democrat Sen. Daniel Patrick Moynihan, early in his career
as a policy wonk, warned the system would lead to higher college costs.
Generally speaking, more money chasing after something
raises its price. But the money chasing after higher ed is uniquely dulled of
its price sensitivity. Borrowers are young and have little perspective about
how much they are borrowing. These young, subsidized borrowers are also robbed
of price signals, as everyone gets the same rate no matter what major he or she
chooses.
That explains why college tuition has increased far more
than inflation since the 1965 law passed. And subsidized student loans explain
at least half — and probably as much as 80 percent — of this increase above the
rate of inflation. Here’s The Economist on the subject:
The price of college has risen more
than four times faster than inflation since 1978, easily outpacing doctors’ bills.
Much of this cash has been wasted on things that have nothing to do with
education — plush dormitories, gleaming stadiums and armies of administrators.
In 1976 there were only half as many college bureaucrats as academic staff; now
the ratio is one to one.
Too Many People in
College Who Should Do Something Else
Nevertheless, Congress certainly succeeded in its goal of
more Americans attending college: Almost 70 percent of high school graduates
now enroll in college, and the percentage of Americans aged 25 to 34 years old
who have a secondary degree has moved from about 25 percent in 1990 to almost
50 percent today. But although college on average still provides a positive
return on investment, that return has dropped significantly. Here’s The
Economist, again:
By the universities’ own measures,
this [binge of money and increase of administrators] has produced splendid
results. Students are more than twice as likely to receive ‘A’ grades now than
in 1960. When outsiders do the grading, however, they are less impressed: One
study found that 36% of students ‘did not demonstrate any significant
improvement in learning’ over four years of college.
For many Americans, the return on college is negative.
Part of this is because many Americans going to college are ill-suited for it.
For example, 40 percent of American students fail to get a four-year degree
within six years of enrolling.
Even for students who graduate, some degrees or majors
are often worthless. Broadly defined arts degrees at 30 percent of colleges in
a study offered worse returns than plugging the money into a longer-duration
(longer-term) Treasury bond, which barely breaks even or even loses money after
inflation.
College Degrees Are
Mostly Signalling Devices
Even for students who should be in college, and who
choose majors with significant earnings and employment prospects, college is
far too often an expensive resume-sifting tool for potential employers. The
Economist explains, “Degrees are also signalling devices. The premium
includes the income-boosting effects of personal characteristics that are more
likely to be held by those with degrees, not because they acquired them at
university, but because they possessed them on admission.” It continues:
As degrees have become more common,
their importance as signalling devices is rising. Recruiters, who pay none of
the cost of jobseekers’ higher education, are increasingly able to demand
degrees in order to screen out the least motivated or competent. A recent study
by Joseph Fuller and Manjari Raman of Harvard Business School found that
companies routinely require applicants to have degrees, even though only a
minority of those already working in the role have them. This increases the
graduate premium — but by punishing non-graduates rather than boosting the
absolute returns to degrees.
In other words, students are often paying more for their
employer to be able to cheaply interview job candidates than they are for
skills they couldn’t have gained in the workforce, while making money instead
of paying money. The Economist’s researchers “find only a weak link
between higher shares of graduates in an occupation and higher salaries. For
around half of the occupations that employ higher shares of graduates now than
a half-century ago, real wages have fallen.”
Higher Ed Institutions
Are Also Indoctrination Factories
Worse, the left loves the current system of higher ed
subsidization — not because of the economic benefits, which are increasingly
hard to justify across the board, but because the American college experience
is an ideological indoctrination factory.
Students at the University of Minnesota receive books to
read that include “Capitalism’s War on the Earth,” but nobody teaches them that
the worst environmental degradation ever seen has occurred in communist,
centrally planned economies such as the Soviet Union and (now) China.
Educators teach students that Christians pioneered the
mistreatment of women and that marriage is a patriarchal fabrication, without
teaching them how badly pre-Christian paganism treated women, and without
teaching them how the early church singlehandedly elevated the status of women
and children.
At my alma mater, Bethel University in St. Paul,
Minnesota, a history professor spent an entire class attempting to prove
Americans weren’t really on the side of justice and right in World War II. I
told the professor that your average plumber, carpenter, or factory worker was
now far smarter than the class — most of whom went on to be K-12 teachers. And
I was right.
These are anecdotes, but they aren’t fringe examples.
They are commonplace in modern-day academia. Today’s college students can flip
a coin as to whether their professor is a neo-liberal or a neo-Marxist, but
that’s about it. That leaves at least half the country unrepresented, and it
threatens the lessons previous generations have bled to transmit to our nation.
You’d think it couldn’t get worse, but it does. The
current system delays adulthood for at least four years and then burdens young
Americans with debt, just when they should be starting their lives and
families. This certainly suppresses or delays family formation and
child-rearing, and probably, on the margin, increases the number of sexual
partners Americans have before they are married.
A Clash of Higher Ed
Plans
Tennessee GOP Sen. Lamar Alexander, the former George
H.W. Bush education secretary and former president of the University of
Tennessee system, has walked out his plan to reauthorize the Higher Education
Act. Alexander would simplify FAFSA, an assistance program for low-income
students, and simplify repayment plan options, both laudable goals.
But Alexander would also swap a rule that looks at the
income versus debt of colleges’ graduating students, which is ostensibly unfair
to “for-profit” colleges, for a rule that looks at loan repayment rates. Why
not do both? And Alexander wants to pull student loan payments directly out of
paychecks, just like federal payroll taxes. In other words, aside from giving
Democrats ammo to lob at Republicans on the wage-garnishment idea, Alexander is
intent on preserving the status quo.
Meanwhile, Sens. Bernie Sanders and Elizabeth Warren,
both running for president, have a higher-ed plan: Warren’s would pay off
$50,000 of debt for those making less than $100,000, and Sanders’ would pay off
practically all of America’s $1.6 trillion in student debt, make state college
“free,” and attempt to pay for it by taxing stock and bond trades.
This would be a stunningly bad idea, primarily because it
would be a handout to relatively wealthy Americans. But Warren and Sanders
would also continue a system that doesn’t align students and their degrees with
the labor market, and would turn an ideological indoctrination factory largely
paid for by taxpayers into one entirely paid for by taxpayers.
Yet when Democrats — who are proposing fundamental
reforms to a system that Americans instinctively know should be fundamentally
reformed — are juxtaposed to Alexander’s plan, which would only tinker around
the edges, the country is in serious trouble. Republicans, led by President
Trump, need a plan to fight back. And it needs to be a plan they can sell to
the American people. Here’s a broad outline.
A Revolutionary Higher
Ed Plan
Require every college that receives subsidized student
loans to disclose the average income earned by graduates in each major, at
least three years after graduating, and the percentage of graduates in that
major who work in a field related to that major. The “personal responsibility”
crowd says if you took out substantial student loans, its your own fault. But
18-year-olds shouldn’t be trusted with much, let alone picking a school and a
major, while understanding the real cost of the loans they are taking out and
their employment prospects after — when everyone is telling them to go to
college.
Higher ed lobbyists have long resisted efforts to make
colleges report their students’ earnings. For example, the Obama administration
had a meager plan to provide transparency, then shelved it after facing higher
ed industrial complex pressure. Pushing for absolute major-by-major
transparency should be a priority of the Trump administration. Set up a website
to house the data: HigherEdReturn.gov.
Congress should pass a tax exemption for employer
contributions, up to $2,000 per year, into a 401(k)-type investment vehicle
that allows for money eventually to be withdrawn at the long-term capital gains
rate, in order to pay down student loan principal balances. Investment options
should be limited to a well-diversified portfolio, and companies should bid to
provide the lowest management fees. The proposal would be politically popular,
and it would probably save the federal government money in the long run, if
more people pay more of their student loans.
Congress should make student loans dischargeable in
bankruptcy proceedings. Currently, student loans are just about the only
type of debt that is extremely hard to discharge in bankruptcy. Congress
changed the law to favor lenders in a sop to the higher ed industrial complex,
and it should reverse that change. Going forward, this change would force
lenders of student loans, private and government, to be more careful about who
they lend to, and saddle fewer Americans in endless debt.
Require colleges to take an equity stake in their
students. Automatic wage garnishment by the government to pay for its
irresponsible student debt lending is a bad idea. But requiring colleges to
have skin in the game is a great idea. Here, Florida Republican Sen. Marco
Rubio has some good ideas, as does current Purdue University President and
former Indiana Gov. Mitch Daniels.
For example, colleges could be required to receive 10-20
percent of tuition as a future payment of a small percentage of their students’
income for 10 years after graduation. If their students’ majors and education
helped them make a lot of money, the colleges would get paid. If the students
made little money, colleges wouldn’t get paid. The result would be an incentive
for colleges to align their degrees with the labor market, and a marked decline
in worthless “social justice” degrees.
Focus more on technical schools and apprenticeships,
and focus less on the four-year college degree. There are no easy answers
here, and history shows it is a bad idea simply to throw money at something
without thinking it through. Germany’s apprenticeships are world-beating, but
Britain tried to replicate that with little luck. But, generally, America needs
more kids in technical school and apprenticeships, and fewer kids in four-year
colleges.
Cut federal funding for schools that don’t protect the
free-speech rights of students, faculty, and visitors.
Higher ed in America is a debt bomb that has enslaved the
young. But on the other side of the transaction, it is the peak of cronyism and
excess for the thousands of bureaucrats and professors who benefit off this
system.
The system is rotten to its core — economically,
ideologically, and spiritually. Trump and every Republican after him should run
on metaphorically blowing it up, and the listed proposals are the least a great
disruptor would pursue.
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