On Monday, Hillary Clinton is unveiling her solution to college debt. The solution is nothing new — it makes taxpayers pick up the bill.
How innovative! How original!
In all seriousness, Clinton’s plan solves the college debt problem like someone snorting more cocaine solves his cocaine addiction. The plan will do nothing to prevent colleges from raising costs — just the opposite, in fact.
The proposed plan will ask for realistic, affordable contributions from students’ families to the student’s college education, and the rest of the money – by her campaign’s own estimates, $350 billion over 10 years — will come from taxpayers. Interest rates on student loans will also be reduced.
In essence, this hands colleges a blank check — no matter what exorbitant cost they charge, the taxpayers will pick up the tab! SOLVED. A few years ago, Robert Tracinski wrote a piece in Real Clear Markets perfectly summarizing the situation:
The greater the subsidy, the more money flowing in to the sellers of a product or service, the less incentive they have to reduce costs–as we can see in all those universities taking in federal loan and grant money and using it to decrease the tuition breaks they would otherwise offer to students.
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Hence the treadmill effect created by the Paradox of Subsidies. The more the government subsidizes something, the more expensive it gets–which requires higher subsidies to get the same results, which increases the costs even more–which requires still higher subsidies, and so on.
Clinton is right about one thing: Students are taking on an unsustainable amount of college debt. But that is largely the government’s fault for writing blank checks to colleges. Colleges have known for years, and under Clinton’s plan would be reassured with billions of dollars, that they can charge any amount they like, then students will pay a part, and the federal government will fill the rest in with taxpayer dollars.
Clinton’s plan also notes, “Students at community college will receive free tuition. Students will have to do their part by contributing their earnings from working 10 hours a week.” That seems like another blank check followed by a non sequitur.
Clinton’s plan to keep college costs in check reads thusly: “Colleges and universities will be accountable to improve their outcomes and control their costs to make sure their tuition is affordable and that students who invest in college leave with a degree.” She gives no specific measures for accountability in cost, though it seems she’s ruled out the free market.
Also, there should not be incentive for colleges to make sure “students who invest in college leave with a degree.” That means colleges don’t have an incentive to make sure students learn, but to make sure they give students a degree. Those are two very different things. It means the incentive isn’t to give a good education, but a devalued piece of paper saying “you attended a college and possibly were passed along, because, hey — you DID pay these outrageous costs. After all, you deserve something from that.”
Bottom line: Clinton’s plan deserves an F.
