OPINION — President Trump wants a trillion dollars for infrastructure. Too late: we already spent it.
Taxpayers have spent $1.4 trillion enriching college administrators and building fancy student amenities. Worse, none of it appeared in the federal budget.
How did this happen? Oh, just another social entitlement program run amok.
Everyone should have an opportunity for a college education, right? The knee-jerk government response: Create a new entitlement.
The Higher Education Act of 1965 was part of President Johnson’s Great Society. The act’s Title IV included a student loan entitlement program that was sold originally as providing a step-up, not a handout, for students who could not afford tuition on their own. Few could oppose that, few did.
But over the years, politicians couldn’t resist greatly expanding the number who qualified for loans while hiding the program’s costs.
Responding to increased demand, colleges did what any business would do: raised prices. Higher tuition led lawmakers to increase student loan funding. Colleges increased tuition even more. So began an upward spiral.
College tuition has increased over 260 percent since 1980 while consumer prices rose 120 percent.
Read more: Education Board of Regents aims at moderate tuition increases (Utah)
Where did all this money go? Surprisingly little of it has gone to additional faculty. Instead, Bloomberg explains, colleges have been hiring administrators to deal with the federal red tape that comes with federal money.
The Huffington Post reports that 517,636 administrators and professional nonteaching employees were added nationwide between 1987 and 2012, an average of 87 a day.
For example, the University of California, Berkeley, now has more senior administrators than professors; the same is true at the highly-regarded University of Michigan. The New York Times reports that between 1975 and 2008, the California State University system added 400 faculty and 8,400 administrators.
In the Huffington Post article, Andrew Gillen, a senior researcher at the American Institutes for Research, said, “There’s just a mind-boggling amount of money per student that’s being spent on administration. It raises a question of priorities.”
In yet another government demonstration of the law of unintended consequences, today’s college students are going into debt to pay nonteaching administrators’ salaries.
Where did the rest of student loan money go? Like any business competing for customers, colleges have used this influx of riches to construct expensive student amenities, most hardly needed for instruction. Over-the-top student centers, dormitories and rec centers now grace many campuses, both public and private.
Our own Dixie State University just announced a new $50 million “Human Performance Center,” aka. glitzy recreation facility. A 50-meter indoor pool and a climbing wall along with many other features belie the university’s claim that this costly facility is needed to teach exercise science and sports management courses. Instead it is intended to attract new students and keep them happy.
Read more: State commits funding to university’s Human Performance Center
Taxpayers have loaned students $1.4 trillion so far. That number is growing by about $100 billion per year. But it doesn’t show up in our national budget or add to our deficit. Surprised? That’s because these loans are supposed to be repaid and are shown as an asset on government books.
I say “supposed to be repaid” because Congress now realizes that its good intentions have paved the way to the likes of debtors prison. Increasing numbers of young people are swamped with the debt they piled up in college.
In 2016, the average graduating senior had $37,172 in student loan debt. Over half are unable to repay.
After creating this mess, politicians have begun to feel the heat from 44 million student debtors. The government’s predictable solution: Find ways to shift the repayment burden away from students and onto taxpayers.
The Obama administration created a variety of income-based ways to limit repayment amounts. After making reduced monthly payments, a student’s remaining balance would be forgiven after 10 years for those in public service jobs and 20 years for the rest.
Ted Mitchell, a former undersecretary at the Education Department, said such programs “are helping millions of borrowers successfully manage loan repayment, particularly those for whom standard repayment may prove challenging.”
That’s bureaucrat-speak for shifting the cost to taxpayers. Last year, the Government Accountability Office calculated that about $108 billion in student loans won’t be repaid under Obama’s new rules. But even that number is far too optimistic. Why?
For years the Obama administration reported that the student loan default rate was about 11 percent and that the program would still show a profit for taxpayers as remaining loans were repaid.
In January of this year, conveniently after the election, the Education Department found a “coding error” that, when corrected, showed that fewer than 46 percent of borrowers are actually paying down their debt. The rest have defaulted, sought forbearance or enrolled in income-based repayment plans that are insufficient to pay down their loan balances.
Bottom line for taxpayers: Hundreds of billions of dollars previously reported as assets on government books will instead turn into additions to our national debt.
What did these billions get us? An ever-growing phalanx of college administrators and a lot of very expensive campus buildings.
Adding insult to this injury, Bernie Sanders just introduced a bill to make college tuition “free.” Free for whom, Bernie? Even liberal NPR acknowledges that such a program “can drive up costs in a couple of different ways.”
Once in place, all entitlement programs are extremely difficult to scale back or terminate. Just as Social Security and Medicare will drown the country in coming decades, student loans are repeating the process in their own small, $1.4 trillion way.
The next time you hear about a new entitlement program, no matter how noble its intent, clutch your wallet and run like crazy.
Howard Sierer is an opinion columnist for St. George News. The opinions stated in this article are his own and may not be representative of St. George News.
Ed. CORRECTION: This column headline is corrected to $1.4 trillion, not $20 trillion, student loan disaster.
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Twitter: @STGnews
Copyright St. George News, SaintGeorgeUtah.com LLC, 2017, all rights reserved.
Excellent Points.
The composition of the workforce has been changing for years, and while we have lost many low-skill required jobs to foreign countries, or factory automation, there are plenty of opportunities for vocational education graduates.
In the “old days” a college education was ticket to a decent job, and career path. The course of study was not as important as the fact that a person completed a four-year degree. The Major was not necessarily important, as long as the candidate showed critical thinking skills.
Today’s employers are more focused on potential hires that can “hit the ground running” in a specific job. The good news is that the educational system has recently promoted STEM courses. STEM employment opportunities exhibit above average compensation opportunities. Students pursuing this path are more likely to land a job that affords them the opportunity to pay back their student loans. However, this represents only a fraction of the student body at most institutions.
Parents need professional help in figuring out how to guide their kids through the tertiary education maze. In all fairness, some of these kids should be redirected into skilled trades, where a two-year associates degree, coupled with an apprenticeship program, would lead to a solid job.
While some students will still pursue a liberal arts education, even after recognizing that the labor market does not assign much value to these graduates, they will be forever financially disadvantaged.
So the root of the problem is that colleges and universities are being run essentially as a for-profit business? I thought you ‘conservatives’ loved that sort of thing. Also you left out all the waste and corruption of college athletics programs.
Where have you been the last twenty years?
Colleges and universities ARE run to be for-profit businesses, and the majority of them are run by liberals. Even the most casual observer of higher education has long known — that conservative administrators and professors are vastly outnumbered by liberal ones —up to a 33:1 ratio.
So you liberals “love that sort of thing”.
seems it aint so much a liberal or conservative issue as both equally love the almighty dollar. Seems it’s more of a ‘(what) happened?’ type issue. Anyways I’d bed a huge amount of the heads and admins of colleges aren’t “liberal”–I will agree that most of the professors are on the extreme left–way too far.
Ed. parenthetical substitute.