Congress Must Investigate Student Loan Costs

If you focus on a major issue about which nothing is being done then you can skip ISIS, Immigration or jobs. But if you want to talk about a looming crisis that gets mentioned frequently, but about which absolutely nothing is being done, then that is the booming student loan portfolio that is going to crash down on America’s head soon. This Congress – the 114th -- needs to focus on the looming student loan crisis and the root causes of the crisis.

I have written about various aspects of the cost of college education numerous times over the last few years. As far back as November 2011, I defined that college costs were rising at four times the cost of inflation for the rest of the economy. This information came from Naomi Schaefer Riley’s book The Faculty Lounges. In November, 2012, we wrote about how Tom Harkin’s committee in the Senate (Senate Committee on Health, Education, Labor and Pensions) was skewering for-profit universities which are less than five percent of the student loan problem while barely speaking to the “non-profit” universities which are the real problem. This committee was on its fourth study of for-profit universities and had not addressed at all the exploding cost of state schools and private ones like Wisconsin and Yale. All of these schools receive federal money so all of them fall within the purview of the Congress.

President Obama and his minions have brought the student loans under the auspices of the federal government. Senator Elizabeth Warren (D-MA) wants to decrease the interest rates being paid on these loans because she feels some are too high. Neither one wants to address the root cause, which is the soaring cost of a college education. They would never do so because their friends in the “intelligentsia” would have to answer questions about their mismanagement of resources. Their solutions all have to do with relieving the debt from the students. If you do an internet search on student loan forgiveness you will find a multitude of Obama-related plans to lessen the burden of the borrower at the cost of the American taxpayer.

The recent budget proposal by the Obama Administration buried the fact they are planning on writing off $21.8 billion of these student loans this year. The Politico article stated that when this was addressed to the Administration they stated it was a ‘pittance’ compared to the overall portfolio of loans. That is $21.8 billion quietly being added to the national debt.

The increase in tuition keeps marching on, exemplified by the announced 25% increase by the University of California system -- one of the largest in the country. UC President Janet Napolitano announced that the increases are necessary “to maintain the University of California in terms of academic excellence.” The annual increases of 5% fly in the face of our current inflation rate of 1.3% in the country. It has been asserted the real reason for the increase is the estimated $8-16 billion shortfall in pension funds due to the highly-compensated employees of the UC system. Either way, the students are going to have to make up the difference by either draining family assets or increasing the amount of loans they take out to an even higher level, creating a further impediment to repayment. Those loan balances are stifling the economic growth of a generation by hampering their ability to move forward with their lives and do things like start their own businesses or buy their own homes.

These increased college fees are focused toward what aim? Like the studies done on the for-profit institutions, the traditional universities must answer: From how many students are these continually-burgeoning fees taken that never receive a college degree? More importantly, the for-profit colleges engage students with the idea of having specific career training for which they can obtain a position upon graduation. One of the knocks against for-profits is the lack of post-graduation placement. The post-graduation placement of students from the traditional universities needs serious analysis as those figures will be dismal in many cases. Few would care if you could say to the students “that is the risk you take.” But when the American taxpayers may have the tab put on their shoulders, the Administrators of these programs should be called to account for the promises they make. Often times the only placement that can be done within certain majors is within the department at the attended school or another like department at a similar school. The remaining graduates go either jobless or start their career in hotel or restaurant management.

Recently, James Delisle, director of the Federal Education Budget Project at the New America Foundation, wrote in the Wall Street Journal of how the graduates are using different methods of delaying their loan payments. It is called forbearance. These delayed payments have ballooned to $125 billion of the estimated $778 billion scheduled for current repayment (total debt being $1.13 billion as of September 2014). The Obama Administration is encouraging this forbearance program, tying it to income-based repayment. This income based repayment program will result in an average forgiveness of $41,000 per loan.

That is money that has been paid to universities that will never be repaid and then added to our national debt. If this is what will happen then it is not the obligation of the Congress to demand a decreased cost of graduate and post-graduate education to lessen the potential burden for their constituents.

This is in the face of our president trying to expand payments for colleges by absorbing the cost of some community college students and nationalizing our local community college system. That is just a first step to paying for all community college students and then expanding that to four-year colleges. Obama wants to throw more money at a system that is already out of control.

Senator Lamar Alexander (R-TN) who took over for Senator Harkin, and Congressman John Kline (R-MN) who heads the Education committee in the House, need to hold extensive hearings about the soaring costs of college education and the related loans that are becoming an American disaster. Congress needs to step in and end this uncontrolled hand out to a select class of people – university employees.

When we, you, or I say “Congress must investigate” what we are saying is “Let’s make sure nothing gets done about this”. Why, if we perceive a problem and would like something done about it, would we like to have a feckless, special-interest-captured group of people of average or less intelligence and only interested in their own re-elections try to fix something?

If you, the author, perceive a problem, and any idiot can see there is a giant problem with student loans given the overwhelmingly useless degrees kids pay tens of thousands of dollars to achieve, then state, please, affirmatively, what you perceive as the problem and what your plan is to do something about it.

Likely, you will then be stating a position that somebody or a huge mass of entrenched somebodies is charging too much for something. Good luck.

Surprise, surprise. Those who crave power will always give away what belongs to others to gain the votes of the masses. Free food, free education. free healthcare, free housing.

Never mind that the economic physics of what they have done will cause the exact opposite thing to occur.

The government reduces interest rates. The price of housing goes up.
The government hands out EBT cards. The price of food goes up.
The government hands out student loans. The price of a college degree goes up.

It's purely anecdotal, but I do hear about lots of people in their 20's and 30's who have somehow been living off college loans for the past several years.

Forgiving those loans is the next big gift from Dems to lazy libs who want to live off the public dime forever. The promise of forgiving the loans could be the next big carrot that a Dem candidate can use to sway voters... unless Obama does it first and takes all the credit.

If this happens, I suspect that many will repeat the process... and "go back to school" for the next 10 years again... then wind up being 40 with useless degrees and no prospects. All they will be able to hope for at that point will be outright Communism in order to survive.

I just wonder what you say to those individuals and families that planned, sacrificed, worked two jobs, etc in order to avoid massive student debt when student loan debt is forgiven for those that didn’t make those financial choices

there is a giant problem with student loans given the overwhelmingly useless degrees kids pay tens of thousands of dollars to achieve
There's nothing wrong with the loans - it's the obscenely high tuition rates being charged by the colleges and poor matriculation choices by the students.
And all of this despite endowment funds in the billions.

Cementjungle; Kaslan

I am in the courtroom often. When defendants are asked if they can afford bail, afford a lawyer, or if they are soon going to be able to pay their costs and fines, the answer is often “Yes, Your Honor. As soon as my student loans come in, I will be able to pay.”

I never hear Ubama, et al., addressing this use of so-called “student” loans. Cars are paid for as well as marihuana and all the “necessities” of life.

Oldplayer

There is a problem with the analysis give briefly in the sentence: "They would never do so because their friends in the `intelligentsia' would have to answer questions about their mismanagement of resources."

The people who are mismanaging resources at universities are not members of the intelligentsia, but members of what Djilas called "the new class", professional managers. Universities would cost less and would be better run if they were still run by their faculty, yes even the loons in [aggrieved group] Studies departments, than by professional university administrators who build personal fiefdoms, expand activities which are not the core purpose of a university, and largely control their own remuneration and that of the faculty. I refer you all to the book entitled The Fall of the Faculty: the Rise of the All-Administrative University by a member of the faculty at Johns Hopkins for broad documentation of the phenomenon, and cite as an example my own university (a land-grant university in the Great Plains) where in 20 years enrollments rose about 25%, the faculty shrank 0.4%, and the number of administrators and support staff rose by 50%, all while the faculty's salaries barely kept pace with inflation, while administrators normal got raises in the range of 8% per annum.

I friend of mine was hiring for a position. He received over 50 resumes to consider, and that was AFTER the HR Department whittled them down to who was "acceptable" to consider. He said he heard the number of people who applied was in the hundreds.

Of the 50, he kicked it down to about 12, and submitted them HR for another review. They handed him back his top 12 to consider for phone and Skype interviews before an in-person interview process for the Top 3, but also gave him another 2 names that he "should also consider." Both had only undergraduate degrees, and one was in Feminist Black Studies. Every other of the Top 12 candidate had at least one Masters Degree. Every one.

He played HRs game, and then ultimately picked the most qualified. He said he was waiting for them to push their quota candidates again, but they backed off.

“Just curious.

What kind of job would consider a degree in Feminist Black Studies helpful?”

You are not asking me but I will answer you:

The kind of job that needs to be filled by a minority in order to satisfy affirmative action policies.

And when they get done forcing the affirmative action employee on the supervisor, they will blame the supervisor for the decline in productivity and increase in poor quality work in the department.

I’ve watched it happen.

Nah...Here’s a better thought...

Let’s get fedgov clear out of the education bidness, altogether. There is absolutely NO Constitutional authority for them to be involved in the education of ANYONE in the country, under any circumstances.

The trillions of taxpayer dollars that have been wasted on progressive, socialist education reform initiatives have yielded only ever more socialists and ever less opposition.

Time to retake the government.

In Ye Olden Dayes, when I did undergrad, you could get a loan for tuition, room, board, and fees.

My daughters get offered max loans far above their tuition and books cost, for “living expenses”.

I pointed out to them that if they take out loans for “living expenses”, I was going to charge them room and board.

They didn’t. . .

What’s to investigate?

Congress has failed to perform its constitutional function to coin money and regulate the value thereof for 102 years (tokens and paper don’t count).

So, a system of popular money known as “student loans” has sprung up, with Federal authority but no Federal supervision.

As a result, debts have accumulated with the fruits thereof flowing to college administrators and favored constituencies, and the rack rate of tuition has now escalated to the point that almost no one can pay it without using the fake money of “student loans”.

Investigate, hell! Give us back our gold and silver money. Make usury illegal again. Hang a few bankers.

Screw the “investigation”.

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