Our view: Free stuff? Warren’s college plan flunks key tests
With student loan debt at a record $1.5 trillion, the time is certainly ripe to address the high cost of higher education. Sen. Elizabeth Warren of Massachusetts, seeking the Democratic presidential nomination, has that much right.
But Warren’s plan to eliminate college tuition and forgive much of the debt students have accumulated is neither effective nor fair.
According to her campaign, the proposal would cost $1.25 trillion over 10 years, to be financed with a tax on the ultrawealthy. States also would also be called on to provide significant, though unspecified, sums in the cause of tuition-free public education.
College is too expensive. From 1996 to 2016, the average cost of a four-year education rose by 64% over the rate of inflation. Without aid, the average total cost is well over $100,000. At private schools, nearly $200,000 is routine.
The reasons for this cost escalation include swelling bureaucracies, professors who don’t spend much time in classrooms, money-losing sports, expensive building campaigns, and an inability or unwillingness to use technology to become more efficient.
Throwing more money at universities is not the solution. In fact, a good case can be made that it’s a part of the problem. Tuition has increased even as funds from Washington, state governments and private sources have flooded in. The New York Federal Reserve found that for every dollar in new subsidized student loans government offers, schools jack up tuition 60 cents.
Any honest higher education plan would focus on getting universities to bring their tuition costs under control. The federal government provides about $30 billion a year in grants and more than $100 billion in loans so that millions of young men and women can attend college. This money provides more than enough leverage for the federal government to demand action.
Just how colleges control costs would be up to them. But the days of institutions harvesting taxpayer money to spend as they wish would be over.
The first part of the Warren plan sidesteps this issue to sell the public on the idea of “free” public education. The second part of her proposal — debt relief of up to $50,000 — is better spelled out. But it, too, has real problems.
Any kind of debt forgiveness produces perverse incentives and raises fundamental questions of fairness. Parents, for instance, might save less for college if they thought they could borrow money and not have to repay it. Those who financed college through work study or taking time off to earn money would justifiably be outraged, as would those who scrimped to pay off loans not eligible for forgiveness. The concept of debts as personal obligations would be undermined.
Any higher education plan should start with halting the cost increases so that any additional money spent by taxpayers actually goes to making college more affordable. Warren’s approach would do the opposite.