Don’t incentivize government jobs with student loans
President Obama, in his latest push for higher education reform, used several speeches last month to outline his plan to reinvigorate the college system, which he called in a weekly address, “the surest path to the middle class.”
Among his proposals were plans to rank colleges based on the opportunities they provide students and tying funding, in part, to keeping tuition down. Obama also promoted innovations that will allow students to graduate faster and for less money, like putting more classes online and “basing course credit on competence, not just hours spent in the classroom.”
The higher education push is commendable, as the current system is in need of serious reform, and these proposals, while vague, are promising.
Especially in regard to online learning because it has been repeatedly shown to be a viable lower-cost alternative to traditional education and offers the greatest potential to connect students with the resources they need.
But, the last element of the president’s three-point plan was concerning. Instead of offering innovative solutions to the ever-growing burden of student debt, he retreated further into the big pockets of the federal government.
“We’re going to help more students responsibly manage their debt, by making more of them eligible for a loan repayment program called Pay-As-You-Earn, which caps your loan payments at 10 percent of what you make,” he said.
But, the Federal Student Aid website shows what the president failed to mention: All outstanding loans can be forgiven after 20 years, 10 years if you work for a “public service organization.”
This merely sweeps the tuition problem under the rug, doubling down on the near-limitless access to money that has driven up the costs for higher education and turns graduates away from jobs that would allow them to actually pay them back.
“The idea simply raises incentives for future students to borrow more money, if they know their obligation to pay it back is capped. That, in turn, allows colleges to keep raising costs,” Richard Vedder, director of the Center for College Affordability and Productivity, said in a piece in the Omaha World-Herald.
Furthermore, before loan forgiveness programs, students were only reassured by their ability to pay loans back.
That didn’t always work out like it was supposed to, but it encouraged students to find work in fields for which there was actually a demand.
Now, by expanding the program — that 33 million graduates are already estimated to be eligible for, according to the Associated Press — the president plans to saddle the taxpayer with a growing debt of public service, which includes often-benefit-rich government employment.
It is a worrisome interference into the job market that places emphasis on jobs the government finds noble, rather than those the market finds beneficial.
While the call to public service is by no means unworthy, the federal government should steer clear of socially engineering artificial demand for degrees that leave students with fewer real-world options, the surest path out of the middle class.
From the Orange County (Calif.) Register
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