In a recent article published on Credit.com, Sen. Elizabeth Warren promised to bring back a bill to the Senate floor that was defeated over the summer. The Bank on Students Emergency Loan Refinancing Act would allow college graduates who took out federal loans in the early 2000s to pay an interest rate closer to the rate for new borrowers, which is significantly lower.
Sounds nice, doesn’t it? As Warren noted in her article, aggregate American student debt is at an astounding $1.2 trillion, and the exorbitant cost of college is a burden to the economy at large as well as to individual borrowers and their families. But while Warren’s bill purports to deal with what is a very real issue, its re-litigation is pure political theater.
The main objection raised by Republicans against the bill when it was first debated over the summer was the inclusion of the famous Obama-age hobbyhorse – the “Buffet Rule” tax. This proposed tax would raise the rates on capital gains for higher earners, in this case using the additional revenue to pay for the lower student loan rates. But this additional revenue is no guarantee: Capital gains increased under both the presidencies of George Bush and Bill Clinton when the rates were lowered.
Regardless of the revenue impact, this proposal is an obvious non-starter for Republicans. Warren has brought the bill back completely unchanged, and once again it has no chance of being passed. What it does do is provide congressional Democrats an opportunity to excoriate opposing Republicans as being against the interests of students and beholden to “millionaires, billionaires, and corporations,” as though the Democratic Party is without wealthy benefactors.
Warren’s rhetoric in debating this bill has been typically hyperbolic and often dishonest. It is not the case, for example, that students cannot refinance their loans. As Jason Richwine points out on National Review Online, a website which offers conservative political commentary, students “can go to any private lender and ask for a lower rate, just as homeowners and business can. The reason that few students do, of course, is that they are getting a great deal — a generous government subsidy — on their existing federal-direct or federally guaranteed loans.”
Warren’s claim that students are being treated worse than banks is similarly misleading. The Federal Reserve rates are for short-term intra-bank borrowing. To compare this to a several year student loan that has a greater than 10 percent chance of defaulting is absurd, as Warren no doubt knows.
This type of grandstanding is typical Warren and typical Washington. Both sides are, of course, culpable of partisan theatrics in the halls of power, and the abysmal approval ratings of Congress are in many ways well deserved. But to prop up what is at the very best a stop-gap measure as a true reform and then to bludgeon political opponents with its predictable failure is especially odious.
As universities across the country further their unrelenting quests for status with constant renovations, bloated payrolls, gargantuan stadiums and the like, many families are left to wonder if the traditional four-year degree is financially realistic. According to CNN, the cost of college has risen to nearly four times the American median income since 1988, and as demand is stoked continually through cheap government loans and, to a lesser extent, affirmative action policies, it is unlikely that it will slow anytime soon.
But the fight for affordability is not lost. Texas Gov. Rick Perry, Republican, of the “oops” infamy, has quietly been the leading force behind higher education reform. In 2011, he challenged Texas state universities to craft four-year degrees for a total cost of $10,000. Through a combination of online classes, transfer programs and general cost-cutting, a slew of Texas universities have met this challenge.
And where Texas has led, others have followed: Schools in Florida, Georgia, Oregon and Oklahoma have all put forth similar programs within their state university systems. Here in Massachusetts, Republican gubernatorial candidate Charlie Baker has announced a plan for expedited bachelor’s degrees that utilize online learning and co-op programs to decrease costs and increase job-preparedness.
Of course, the best way to avoid student debt is to not be a college student. As our economy becomes more dependent on computer technologies, the demand for technical skills will only increase. Many of the new, high-paying jobs in this field simply do not require a traditional degree. College is often seen as the only way to achieve a happy and financially secure life, but even if this was once partially true, it is no longer the case.
The college experience is less about the development of our own ideas than the adoption of those of the faculty. Our four years are more an exercise in omphaloskepsis than an intellectual training ground. Hereclitus has been replaced by Derrick Bell; free speech is preempted by “multiculturalism” (just ask Ayaan Hirsi Ali). The basic principles of higher education have been subverted by the Frankfurt School, Critical Theory and the sensitivity police. Why would you pay $200,000 for that?
Lucas Coughlin can be reached at [email protected].
