The lede editorial in today’s Wall Street Journal reveals the whiplash inducing 180-degree turn recently made by Obama in his ongoing college campus lecture tour.
For years Obama has been telling students how his trillion dollars higher education loans and grants was making college affordable for everyone. Then on Thursday, he said, “We’ve got a crisis in terms of college affordability and student debt … Our economy can’t afford the trillion dollars in outstanding student loan debt, much of which may not get repaid because students don’t have the capacity to pay it.”
Pay no attention to the fact it was Obama who nationalized student loans in the first place and pushed through a plan to add $1 trillion in federally guaranteed student loans. As the WSJ noted, his recent remarks came “without a trace of irony.”
As the WSJ editorial noted further down, like in so many instances of government interference, the government creates the problem and then blames someone else. They force banks to make sub-prime home loans and then blame greedy bankers and Wall Street when the buyers default.
“Politicians subsidize the purchase of a good or service, prices inevitably rise in response to this pumped-up demand, and then the pols blame the provider of the good or service for responding to the incentives the politicians created. Think housing finance and medical care,” the editorial reasoned.
Since 1965, when Johnson’s Great Society began subsidizing college costs, tuitions have skyrocketed. This week the White House reported tuitions have increased 257 percent since 1983, while household incomes increased 16 percent.
To add to the analysis, the Saturday interview piece is with Ohio University’s Richard Vedder, who directs the Center for College Affordability and Productivity.
At the time Nevada’s university regents were talking about double-digit tuition and fee hikes in each of the next two school years — this on top of recent increases in fees of 50 percent.
Vedder says the higher-ed bubble is bursting and this can be seen in the number of unemployed or underemployed college graduates with huge debts —$26,000 on average but many higher than $100,000.
Obama has proposed capping monthly student debt payments to 10 percent of discretionary income. The entire debt would be forgiven after 20 years, but those who go to work for government or nonprofits could eliminate their debt in 10 years.
Vedder said Obam’s plan “creates a moral hazard problem. What it signals to current and future loan borrowers is that I don’t have to take these repayment of loans very seriously. … I don’t have to worry too much about getting a high-paying job.”
Vedder has been saying the same thing for years. In fact in March 2011, shortly before I joined the ranks of the college educated without a job or prospects of one, I quoted from a piece Vedder wrote for the Chronicle of Higher Education. He than reported that in 1992 fully 18 percent of college grads worked in jobs classified as “noncollege level jobs.” By 2008, that number was 35 percent.
“Some in higher education KNOW about all of this and are keeping quiet about it because of their own self-interest,” Vedder said then. “We are deceiving our young population to mindlessly pursue college degrees when very often that is advice that is increasingly questionable.”
Things have gotten worse instead of better since.