A Few More Thoughts on What Might be Biden’s Worst Idea Yet (posted 8/29/22)

I’d like to follow-up on your lively responses to my Friday column about Biden’s plan to “forgive” student loans.  As always, the discussion here was smart and interesting, and evidence that this issue has touched a nerve all across the country.

Aside from the issues of fairness and practicality that much discussion focused on, many people decried how much more expensive college is now, adjusted for inflation, than it was decades ago, and you’re obviously right.   I’d point to 3 main reasons for the steep price increase:

1. Easy government loans have contributed the most.  Several commenters mentioned the government take-over of the loan system, and I think that’s the largest factor. 

The previous, private loan system wasn’t perfect, but it had the built-in regulator of the free market: banks who made loans to people who couldn’t pay them back would suffer the financial consequences.  (Whereas the government doesn’t worry about that at all, as evidenced by the huge outstanding debt amounts, much of it owed by students with degrees in trendy and/or easy majors – grievance studies, liberal arts, social work, media, etc. – and the sudden “discovery” that those debts are crippling, and thus must be transferred to the suckers, er… taxpayers.)

All the negative stereotypes about bankers didn’t just come out of nowhere, nor did old jokes about a banker being someone who would only give you a loan if you could prove that you didn’t need it.  For many, the word “banker” conjures up images of Mr. Potter in “It’s a Wonderful Life.”  (“You’re worth more dead than alive, George Bailey!”)   

I refer you back to the verse from Hebrews, e.g. “no discipline is pleasant at the time…”

Bankers were often fiscal disciplinarians, in the sense that they had to deliver harsh news about the way the world works.

It was unpleasant to go to a bank and ask for a large loan to get a four-year degree in, say, English.  Mostly because the banker would laugh at you, and then toss you out of the bank like John Wayne – in a film in which he’d eventually tangle with the war-painted Warren tribe (#wemustneverstopmockingher) — tossing a local varmint through the swinging saloon doors into the dusty street. 

But that was a useful lesson for the student and the student’s family, because the banker was stating the obvious: we can’t stay in business if we loan you $150K to get a degree that won’t enable you to earn enough to pay us back. 

Many would-be English majors, especially if they were the typical, nascent lefties who tend toward majoring in fields like English, would complain about the unfairness of a system in which engineers, chemists, nurses and accountants could borrow for college, while transgender-manifesto-writing majors could not.

I’m not throwing mud at English major types. I have a BA, MA and PhD in English myself (D’oh!), but even as financially naïve as I was in my youth, I wouldn’t have borrowed six figures to get those degrees.  (And no bank would have loaned me that, and my dad would have whipped my butt for even asking!)  My blue-collar parents worked and saved – and made sure that I worked and saved – enough to get me through the BA. 

And then I got assistantships and worked my way through both graduate degrees, living very frugally and taking on no debt.  That wasn’t easy, but it wasn’t impossible.  (And it was a lot easier than working 20 years of overtime with a backhoe or jackhammer like my dad did, or fighting in Vietnam or Korea and then using the GI bill, like millions of others did.)     

The point is, if our bloated government wasn’t enabling kids to take out ginormous loans to attend super-expensive colleges, those colleges would have to slash their prices, and even then many kids wouldn’t be able to borrow for degrees with no value in the marketplace.

And both of those outcomes would be salutary.

2. Another big driver of rising college costs is an explosion of non-classroom spending, mostly on hordes of administrators of various sorts. 

Professor salaries – at least in the kind of liberal arts departments that I know a lot about – have not been out-pacing inflation over the last 40 years.  My salary in my last year of a 31-year college teaching career was just barely higher than the average household income in the entire country, and that was typical for my colleagues in a writing program.

Don’t get me wrong: I’m NOT complaining about that. 

The non-monetary compensations of my job were amazing: I got to read great books and teach them to (some) great students. I got to write and yammer on about subjects that interest me — and I’m a world-class yammerer! 

The hours were reasonable and the summers were light; I got to work in air conditioning.  People called me “Dr.” even though I’m barely closer to a real doctor than “Dr.” Jill Biden.

Plus I never had to worry about getting blown up or injured or having my body worn down the way my blue-collar family members all did.

Besides, I knew what to expect when I got into the field, and complaining afterward would be ill-mannered and childish.

(It would be like a guy taking vows of chastity and poverty to join a religious order, and then complaining later that he’s not getting laid, and he’s broke!)

The vast majority of the growth in university salaries over the last 40 years has been in administration and non-classroom personnel.  There used to be a handful of deans and secretarial staff, and maybe a few assistant deans for colleges that included a variety of programs under their umbrella.

Now there is a small army of assistant deans and assistant to the assistants, and a large army of administrators and staff in the fashionable/vacuous areas of diversity, equity and inclusion, none of whom ever darken the door of a classroom.

3. The third big driver of college costs arises from our society’s affluenza; it is “lifestyle” spending by both schools and parents.   

Schools spend hundreds of millions on high-end luxury everything: elaborate recreational complexes, fitness facilities fit for professional sports teams, and student housing that is more akin to luxury apartments than traditional dorms. 

A typical dorm 40 or 50 years ago was just a step up from military barracks: no a.c. (or maybe some wheezy window-units), a communal bathroom on each floor, an uninspiring cafeteria, and no frills. 

By contrast, the vast majority of student housing built at most universities in the last 15 years or so is much higher-end.  Most rooms are set up as suites of 2-4 bedrooms, each with 2-4 bathrooms; single rooms are also available for a premium.  All of the finishes are better, and many more options exist for food and recreation.

Off campus housing also reflects much more expensive tastes, not dissimilar to the improvements in average American housing.  The average home in 1972 was around 1250 square feet, with 3 bedrooms and 1 bath, and a 1-car garage or carport; today it’s 2500 sf, with 4 beds and 2 baths, and a 2-car garage.

Most of you around my age – if you went to college – probably stayed in at least one off-campus house that you now tell funny stories about.  (“There were 5 of us in a 2-bedroom hovel.  When it rained we’d move garbage cans around the rooms to catch the dripping, and if you plugged a toaster in while the light was on, a fuse would blow!  But you could put a penny in the fuse, and you were back in business… right until the fire started.”) 

You and I lived in places we wouldn’t keep a dog in now.  But our kids or grandkids are living in apartments with gyms, pools, granite counter-tops and NASA-level wi-fi.  At least half of what we spend on kids’ college goes to lifestyle, not education.

There’s nothing wrong with any of that, if you can afford it.  I’m glad my daughters have lived in much nicer dorms and apartments than my wife and I did.  We lived frugally and below our means to make that possible.

But if I have to borrow to provide them with that lifestyle, that’s a choice and not a necessity.  And there’s probably a middle ground available to most people: take out some modest loans to access a little better school or amenities, or else go full Spartan and build some debt-less character!  

I’ll close by repeating Tom Cotton’s assessment of Brandon’s “Debt goes Poof! Act of 2022:”

Of all of the dumb things Biden has done, this might be the dumbest.  

Avenatti/ Mr. Potter, 2024!

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