Bernie's Tuition Plan Is Doomed To Fail - Everyone Knows, No One Cares
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By Alan Collinge, www.thehill.com
April 13th, 2017
Above Photo: Victoria Sarno Jordan
Bernie Sanders unveiled his free-tuition plan this week. The plan, which
would eliminate tuition charges for undergraduate students whose families
earn less than $125,000 annually, looks much like the proposal from New York
Gov. Andrew Cuomo, and also like Hillary Clinton's revised plan from 2015.
Sanders's plan would provide $47 billion to states to cover "tuition and
fees" at public colleges with the requirement that states come up with the
remaining $23 billion, thus making public college tuition-free.
While Sanders's plan certainly does dedicate far more money (per student)
than Cuomo's or Clinton's plans would, it's ultimately doomed to fail - just
like Clinton's plan and Cuomo's plan.
Here is why: Colleges are extremely adept at finding new and creative ways
to get money from students. They can create new billable items that are not
technically "tuition" or "fees," or massively increase the price of existing
items such as dormitory and cafeteria expenses; even if tuition may
technically be reduced to zero, these other items will make up the
difference! This was the fatal flaw with Clinton's plan, and with Cuomo's
plan. Sanders's plan is vulnerable to exactly the same sort of
circumvention.
It is notable that none of these plans put into place any requirement that
money be applied directly against what the students would otherwise be
paying - or borrowing. Absent this, it is abundantly clear that these plans
are all, essentially, massive giveaways to the states and the colleges they
support. These plans set up a game of whack-a-mole, where the only obvious
beneficiaries are the schools.
But these plans are terrible in many other ways as well. They do nothing to
reduce college prices, which are far, far too high in the first place, and
would surely soar higher with this new funding stream in place. Also, these
plans would do nothing to crack the whip on the schools to improve their
quality, or reduce the time to graduate, which has stretched from 4 years to
6.2 years for an undergraduate degree over the past couple of decades.
Furthermore, these plans don't touch graduate students, or private colleges.
What is most astonishing about these plans is that they do virtually nothing
for the 44 million people who are shackled under more than $1.5 trillion in
debt currently. The refinancing plans being proposed by Elizabeth Warren,
Clinton and now Sanders would save the average borrower a couple of thousand
dollars on average, and that will decrease as federal interest rates rise
(which they will). This is insulting, given that the average undergraduate
borrower is now leaving school with $37,000 in student loan debt.
These plans completely avoid the real problem: The student loan system is
predatory and hyper-inflationary due to the removal of bankruptcy and other
consumer protections.
It was reported last month that, in 2016, 1.1 million people were put into
default on their student loans. This is up drastically from the year before,
when 400,000 people were added to the default roles. About 20 percent of
defaulted borrowers put their loans through rehabilitation, so while there
are currently about 8 million people in default on the books, the actual
number of defaulters is closer to 9.6 million people. If this trend
continues, we will see this number swell to 12 million people by the end of
the year.
Elizabeth Warren taught bankruptcy at Harvard, and knows well what is going
on here. Hillary Clinton wrote a great bill 10 years ago that would have
returned bankruptcy protections to all student loans. Bernie Sanders argued
strongly during the primaries that Puerto Rico should have the same
bankruptcy protections that other U.S. states have. That they are all
clearly unwilling to fight for the return of bankruptcy protections to
student loans, and are instead pushing these big-government, tax-and-spend
boondoggles is exceptionally disappointing and astonishing.
And make no mistake: Voters were not impressed with these free-tuition plans
during the presidential election. Yet the Democratic elite seem to be stuck
on the proposition of doubling down on failure.
The 44 million voters who had nothing to vote for in the last election will
grow significantly over the next two years, and they will be far angrier in
2018. If Democrats think that they can double down on this nonsense instead
of doing what Warren, Sanders, Clinton, and many others know is right in
returning bankruptcy protections to all student loans, these voters will
punish them.
