Congress keeping Student Loans Cheap for the Youth Vote while Increasing the Cost of Tuition

Posted by PITHOCRATES - June 30th, 2012

Week in Review

It’s an election year.  And both the Republicans and the Democrats are trying to garner the youth vote.  By making it easy for them to accumulate a massive student loan debt for what may prove to be a worthless degree in today’s economy.  Because of the highest unemployment since the Great Depression.  If you compare the U-6 unemployment rates.  Which is currently still north of 14%.  So it’s hard for new college graduates to find a job.  Especially for those with degrees in the liberal arts and the social sciences.  Which just aren’t in high demand in a high-tech economy.  But cheap student loans translate into happy students.  Later they’ll be disgruntled college graduates.  But the politicians don’t care about that.  Because at the time of the election they’ll be happy and grateful students looking to thank someone with their vote (see How Cheap Federal Loans May Harm Students by Rick Newman posted 6/25/2012 on US News).

The cost of a college education has been rising by about 9 percent per year over the last decade, more than three times the overall rate of inflation…For many families, education inflation is more onerous than the skyrocketing cost of healthcare, since you can’t buy insurance that pays for college.

Several factors are pushing tuition costs up, including cutbacks in state funding and an increasing number of students competing for university spots. But another pernicious cause may be a sharp increase in financial aid available to students, especially federally subsidized grants and loans…

That’s a huge commitment to college education, and a seemingly smart way for Washington to prioritize spending. Yet many experts say that all that aid artificially increases demand for a college education and the money available to pay for it, which pushes prices up. There was a disturbing parallel in the housing market a few years ago, when interest rates kept artificially low by the Federal Reserve, along with lax lending standards, generated a flood of money available for mortgages. That helped push home values far above healthy levels, creating the housing bubble that began to burst in 2006, triggering a brutal recession.

Employment at colleges and universities, meanwhile, has increased consistently over the last decade, in sharp contrast to the cutbacks that have occurred throughout the private sector and in state and local government. That suggests that there’s little cost pressure forcing universities to become more efficient, as many companies have been forced to do.

No one ever talks about the education bubble.  But after the subprime mortgage crisis we had a Congressional investigation and passed new regulations (Dodd-Frank).  And to address the high cost of health care we’ve attacked doctors, hospitals, private health insurance companies and pharmaceutical companies.  Even passed Obamacare (by saying the tax wasn’t a tax).  Yet educational costs are rising higher than even health care (at least from a parent’s perspective) and there’s no Congressional inquiry to find out why.  There are no administrators called before Congress to explain their excessive spending or the exploding costs of tuition that pays for that spending.  Or why they are even hiring more people while the private sector gets by with fewer people.  No.  Higher education gets a pass.  Why?

Because our colleges and universities teach our young students the most important thing in life.  To vote Democrat.  That’s why higher education gets a pass.  The Democrats always do well with the young and the college educated.  Especially those in the liberal arts and the social sciences.  Those courses without a lot of math.  Leaving the students a lot of time to have the time of their lives.  And to participate in the political activities of their leftist professors.  Those professors in the liberal arts and social sciences.

Still, the Republicans hope by making this a bipartisan action that they will deny some of these student voters from the Democrat column come election day.  Showing they can pander just as well as the Democrats.

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