One needs to put Hillary Clinton’s $350 billion plan to end college student loan debt in perspective. It is nowhere near as costly or as much of an entitlement as more radical plans put forward by Democratic rivals Bernie Sanders and Martin O’Malley. It also incorporates some reformist ideas that are already being considered by Congress that would curb some of the worst excesses of the current system and, in theory, promote accountability by colleges that profit from all the money being pumped into the system. But make no mistake, should anything like her proposal ever be enacted, it would amount to more federal control over education and be paid for with a vast tax hike that would hurt investment and affect the same people who are most likely to make philanthropic gifts to universities. It also almost certainly underestimates the amount of money needed to accomplish the task it takes up. More importantly, it would, as virtually every other federal intervention in higher education has over the last few generations, probably result in higher college tuition rather than lowering it.
The issue of college loan debt is an easy one for members of both parties to embrace. The high cost of college tuition is a scandal. Any gesture aimed at reducing the amount of debt students are forced to pile up will always be welcomed by voters from both parties. It also plays directly into the Democrats’ effort to highlight income inequality and pose as the champions of the middle class. After all, the people who are most affected by high tuition are in the middle since the rich can afford it and the poor either don’t go to college or have their bill subsidized.
Clinton is attempting, at least in principle, to find a way to pay for what could well be easily transformed into a new federal entitlement. But the result is pretty much the same. Taxing the wealthy in the form of removing various exemptions in order to pay for middle class tuition sounds like a good idea but it is just another version of the old “soak the rich” routine that generally hurts the economy upon which everyone, including college students and their parents, depend.
Moreover, the proposal also fails to take into account the basic dynamic of federal involvement in paying for colleges that has led to a steady increase in tuition costs out of all proportion to inflation. Though Clinton is being more realistic than Sanders and O’Malley, who are more or less proposing policies based on the free lunch theory of government spending, her idea is a fatal first step in the same direction. In the end, any such plan is bound to increase tuition across the board because that’s what happens when government subsidizes something. Which means that no matter how you reshuffle the deck, the result is going to be more debt for somebody. Through in the added problem of higher taxes that will enrich the government and increase its power and the result is the same toxic brew of good intentions and bad economics that is the hallmark of 20th century American liberalism.
Are there viable alternatives that may actually do some good? The jury is out on that question. They key to actual reform of the system that creates all this burdensome debt should be to lower costs not to find different methods of paying for it since we know that always winds up with Washington’s hand being thrust ever deeper into the pockets of the taxpayer. That’s because we know that, in the end, it won’t be merely the rich who pay for an entitlement for free tuition but the entire country including those who won’t be going to college.
Some of the Republicans candidates have very different ideas. In particular, Jeb Bush and Marco Rubio have put forward proposals that seek to direct more funding toward alternatives to the traditional four-year college model. It’s not clear whether their ideas will work. But unlike Clinton’s proposal, they at least have the virtue of not repeating past mistakes on a much larger scale with much greater costs.
If reducing income inequality is what we are really after, then a new government-based system that doesn’t help make college cheaper, increase competition, or truly help those working people who are increasingly eschewing the four-year model, won’t do the trick. The Clinton college plan sounds thoughtful but what it is a Christmas tree full of disparate ideas that will bring even more of the big government ObamaCare-style thinking to higher education. As bad as the current situation may be, making it far worse just in order to be seen to be doing something about the problem should not be considered a viable solution.
