It doesn’t take a tenured math professor to see that college costs have skyrocketed, producing one of the nation’s most vexing social and economic problems.
Students and graduates now owe more than $1 trillion, making education the second-largest category of debt behind housing. That’s an amazing statistic given that no one gets scholarships for buying cars. And states don’t subsidize malls with special breaks for in-state shoppers.
So it comes as no surprise that lawmakers are trying just about everything to make college more affordable. Everything, that is, except actually making colleges more affordable by forcing them to slim down and use technology to cut labor costs where possible.
The latest idea, launched in 2007 and expanded in 2010, allows graduates to make payments on their loans based not on how much they borrowed but on how much they earn.
Graduates may pay as little as 10 percent of their salary — sometimes not even enough to cover interest on a loan. Those who chose a public service profession have their loans forgiven in 10 years.
While this approach might have some appeal, enabling students to pursue less-lucrative career paths, it presents problems so perverse that even the Obama administration, which pushed the plan, acknowledges them.
The most obvious is that the program’s costs are hard to gauge and harder to control. In 2010, the administration estimated the annual cost at $1.7 billion. By earlier this year, the number had jumped to $7.6 billion.
A second problem is that the program encourages institutions to jack up tuition. As they realize that what they charge has little to do with what students pay, they can hike their fees without driving away potential students.
The administration has only a limited solution. It caps the amount of undergraduate loans that can be forgiven at $57,500. But graduate students are subject to no cap, meaning they could rack up $150,000 or more in debt on top of their undergraduate loans. That amount would be “repaid” at a rate of a few thousand dollars per year ending in as little as 10 years.
The administration’s fix is to apply the cap to all loans. That would help. Some expensive law schools now sell their programs by advising students that they would pay only a fraction of the stated tuition.
A better approach to the high cost of education is to actually attack the high cost of education.
Universities have become wildly bloated and inefficient, spending their revenues on things that don’t directly benefit students — bureaucracies, unnecessary buildings, money-losing sports and professors who spend little time in classrooms.
The federal government and states need to use the leverage that comes with their dollars to demand accountability and cost containment.
With the number of people seeking college degrees on the rise, that could even include new universities devoid of the frills that make existing ones so expensive.
When the government forgives huge debts, it can forget about making colleges more efficient.
— LIVINGSTON DAILY PRESS AND ARGUS