On Tuesday, President Obama announced a plan to relieve some of the burden of student loans. Not surprisingly, the announcement was welcome news to millions of Americans in their early to mid-twenties who are finishing or have finished college and are trying to establish themselves as independent adults (i.e., find a job so they can pay for their loans and then get on with life) in these hard times. However, when one stops to consider the big picture (and do some math), this new initiative is not as great of an idea as it seems at first glance.
This new initiative has two components: one allowing consolidation of different types of loans to reduce the interest rates, and one reducing the maximum percentage of income that will be billed monthly and the number of years before remaining debt is forgiven. On Thursday, the US House Committee on Education and the Workforce has released this statement on the impact of the initiative, based on some hard data. In the middle of their statement, they claim that the average student loan holder who takes advantage of the consolidation of loans component of the plan would see monthly payments decrease by merely a few dollars, or about $75 a year. And the statement notes that only sixteen percent of loan holders can take advantage of this component of the plan anyway. Regarding the second component, the statement notes that only four percent of student loan holders would be eligible for its benefits. Yesterday, the Committee released this statement on the second component of the plan for the general tax-paying public. While the White House’s press release (see my first link) clearly states that this initiative will “carry no additional cost to taxpayers,” the Committee’s analysis demonstrates otherwise.
In sum, this initiative in reality offers only minimal relief to student loan holders (and only a minimal amount of them) while at the same time burdening American taxpayers in general. This latter, negative effect leads to a “big picture” question: how much education do we have a right to in America, and thus how much of taxpayers’ money should the government invest there? Publicly-funded elementary and secondary education, I think most would agree, are a worthwhile use of tax dollars. But is higher education, which operates in a vastly different manner and, in general, with different objectives, also something the government should use its resources to make accessible?
I see nothing wrong with the government providing some money for students from low economic backgrounds to attend college, where they can study a discipline of their choosing and make connections with people from different parts of the country and world. But should a high school student be able to assume that he or she can just get a degree courtesy of Uncle Sam?
I think not. Pursuing a college degree, I firmly believe, is an extraordinarily worthwhile use of time and money – but it should be the time and money of the degree holder and his or her family. The American public should not be shouldering the burden of college costs for the minority of American who have them (I tried to find what percentage of Americans hold a bachelor’s degree, and I found numbers ranging from seventeen to twenty-nine percent, but suffice it to say it is far less than a third, if not less than a quarter of Americans). This article from The Heritage Foundation looks at these big picture issues further. While I admire President Obama’s desire to help my fellow twenty-something Americans get established as adults, continually reducing the amount of debt student loan holders must repay does the opposite – knowing that relief is available (and not understanding the limitations as outlined above), students will take on more debt (and more students will do so), which will further burden American taxpayers, which they become once they graduate and enter the workforce.
This is Rubio, over and out.