Selective Subsidy

Selective Subsidy

Student loan debt forgiveness is bad policy. It does nothing to stem the rising cost of higher education or provide incentives to students, administrators or parents. It is selective in its help and insults all who did not attend college. It penalizes parents who made a conscious effort to save for their children’s higher education costs. Those parents include the social economic spectrum. It rewards the wrong lessons.

It is a government gift for a select few.

The cost of higher education has skyrocketed in my lifetime and at best, the value has remained constant. I think that is a generous claim as my belief is this value has significantly diminished. What has the Legislature, or the Executive Branch, done to control these costs or to ensure value? What practices have the Institutions put in place to educate potential students as to the cost (and prospective value) of these loans. What oversight has been installed to investigate and regulate the huge endowments held, and wholly controlled, by these institutions? What policies have been promulgated to motivate Institutions to keep costs down?

The short answer is none.

Higher Education institutions continue to thrive. Oversight Boards are put in place to ensure the continuation of each entity, not to ensure efficiency or advocate for the individual student. Similar to a Board of Directors for a company is there to ensure the continuation of the company, not the concerns of the individual employee. These Boards are often responsible for tuition-setting and take their recommendations from Institutional leadership. Tuition increases may, or may not, affect demand. Pricing is a fickle science. But if fiscal needs are always great. More prestigious professors, academic program expansion, enhancement of student facilities and others are easy excuses as to why more is needed. Remember: More is good, even more is even better and most is best.

It is a mantra.

Tough economic times can squeeze state revenues and force Legislatures to take tax revenue away from education. Once upon a time, education was a huge pot of money and higher education was an easy place to grab large portions. K-12 was often a target during tough economic times, but many states passed legislation to protect K-12 money which made higher education a bigger target. The Oversight Boards and their astute staff pointed this out. It made tuition increases easier to pass, any complaints and the Legislature is the scapegoat.

It worked.

Higher Education enrollment is increasing. For some institutions, even those who have made tremendous tuition increases over the past several decades, they continue to attract a large out-of-state population. A convenient mantra is often spouted that these foreigners (and many actually are not citizens) subsidize the instate tuition. In short, that is nonsense but it requires thought, time, knowledge of the model, and credible analysis to prove otherwise. Most people have no interest in understanding why and higher education administrators continually insist without the out-of-state tuition differential, in state tuition would have to increase. The fact they can say this without any claim of nonsense reinforces my quality comment.

Government’s job is not to subsidize any subset of the population and while it continues to provide money to corporations (subsidies – under a host of guises), the people need to ensure this selective gift giving does not spread further (they already do it with other policies – tax policy). Both sides of the aisle are guilty of manipulation and granting exceptions that create money for a select few, but the government is becoming more blatant with its gifts.

People need to put a stop to it.

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Categorized as Policy

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