Business Insider, an anti-capitalist web site, has posted a screed designed to make what its socialist-leaning editors think is a telling point in favor of President Biden’s attempt to forgive student loans through the exercise of his caudillo authority: “The Supreme Court justices deciding whether to end Biden's student loan relief program paid an average of $42,539 to go to college. Today, they'd have to pay around $320,531.”
Anyone old enough to have been a college student in the 1960’s or 1970’s doesn’t need to be told that higher education costs have inflated at a much faster rate than almost any other expense. In my freshman year at Yale, tuition, room and board cost $2,800. Today, the price is around $70,000. The increase is approximately three times the rise in the cost of living over that period.
Business Insider’s scarcely veiled subtext is that the Justices lack empathy with students who, knowing the prices that their colleges were charging, financed their educations by taking on huge debt burdens. It would be more sensible to ask why education has grown so much more expensive. Has there been vast improvement in the quality of the product that universities deliver? (pause to let the laughter die down)
There are two glaringly obvious reasons for the price spiral. First, the federal government has freely poured vast sums of money into subsidizing higher education, without any regard to what students were getting in return. Because financial aid and low-interest loans have been so widely available, colleges have been able to charge more. The profits have by and large been used to pad endowments and hire phalanxes of administrators, not for any purpose that would improve students’ return on their educational investments.
Second, the drumbeat of propaganda for universal college attendance has increased demand. Adolescents who in an earlier era would have entered the job market, married and started families now spend several years going through the motions of paideia, emerging with a meaningless credential and often without even that.
One doesn’t need a Ph.D. in economics to figure out that meeting increased demand with an expanding supply of dollars leads to escalating prices. That is the moral of the student debt story.
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