Antony Davies has recently given a really brief pod cast as to how the student loan crisis is similar and even worse to the housing bubble that popped a few years back (it’s worth a look, only 4 minutes long). I think he’s right that this is a major problem. He suggests (as do many libertarians that I’ve conversed with about the student debt problem) that we end federal student aid. This will solve the student debt problem and the rising costs of a college education. Here, I’d like to briefly consider the implications of such a move and what that means for a majority of young Americans. After considering these implications it becomes clear that ending federal student aid is not what’s best. Unless our goal is to have a less educated populace. I’ll speak to a few of the claims he makes specifically rather than all of them for the sake of brevity.
Assume that Davies gets his way tomorrow. No more federal aid! What does this mean for students who do not have the money for college? Well, they could take out private loans, however, most of the lower-income households who would be taking these loans out in the first place will not have the appropriate credit to secure such a loan. Further, many schools will now be without many students and this will force schools to cut costs. This will likely result in less profs and this would affect the level of education that even the rich receive. Sure, this may work to fend off an incoming bubble burst but at what cost to our citizens (many of whom pay taxes).
Davies says; Is it (a college education) a valuable investment or isn’t it? If it is a valuable investment there is no point in the government subsidizing it and if it is not then the gov’t definitely should not subsidize it. Either way, gov’t should leave their hand out of it because they are artificially driving up the price and the costs.
Response: A college education is valuable regardless of the type of job one gets when finished. Also, he claims that tuition/fees go up and that’s a direct cause of subsidizing from the gov’t. I’m not convinced that prices would not have gone up regardless. Sure, they may have gone up faster but they would have gone up regardless (maybe not as high, but higher nonetheless). Prices went up in other countries that don’t subsidize.
Further, he talks about “value” in simple economic terms. The value of a college education has much more value to the person getting educated and the community at large when more people are educated, regardless if there are jobs for the particular degrees. An educated populace adds to our culture and lowers crime, which in turn also saves the state money. Further, tax payers should have a say as to where their money is spent. To say the gov’t should not help its tax payers with their own money is bullshit.
I’m not saying we should continue business as usual but ending the ability for many to get educated is just as bad (if not worse) as subsidizing tax payers and children of taxpayers to get an education.
Finally Davies says; There is no argument here for the gov’t to be subsidizing higher education.
Without it only rich people could attend. That’s enough for me to think that gov’t should be subsidizing it. We’re not talking about subsidizing people so that they can get a Ferrari, to upgrade their “ride”. We’re talking about giving people the tools to critically analyze gov’t policies, workplace environments, technological advances, historical miscues, ethical underpinnings, and the like. These critical thinking tools can be had if coming from a family that values these sorts of things, but, for many lower-income families living pay check to pay check their focus is on how to make ends meat and not on how to give their children the tools to critically analyze their gov’t and their actions.. The argument is to have an educated populace. Without gov’t subsidies many (most) could not attend college. Now, we can sit here and blame who we would like in order to say why this is the case. But the fact remains. If tomorrow, gov’t subsidies were cut, most Americans could not attend college. Prices may come down, but I’m quite skeptical they’ll fall low enough for lower-income families to afford it (especially right away and for the foreseeable future).
One last thought; Gov’t should work to better its people and protect its people. Since the people are supplying the money to gov’t they should be using it for that reason. It seems that higher education falls in line with bettering the populace which would then seem to be an appropriate use of gov’t funds.