College Costs Not Just a Conservative vs Liberal Problem

I've blogged in the past about how the current high out of pocket cost associated with college is a reflection of the fact that conservatives have successfully implemented their preferred policies.  They wanted less public subsidy for school, and that's what we now have. When the subsidy declines tuition has to go up.  Media Matters complies some additional data supporting my claim that you can read here.

But conservatives in my opinion are right about one thing, and it's discussed in an article from Matt Taibbi here.  Yes, state subsidy has declined.  But the government is involved in ways that are highly destructive, particularly the easy access to loans.  This is not much of a government subsidy because the government actually makes a profit from the system.  The default rate is very low because student loans are almost impossible to discharge.  You will be paying back, even if you have no job and end up on disability. 

To a large degree this loan system is more a reflection of the policy preferences of our Democratic politicians.  They pretend they are doing students a favor by providing loans.  This helps the individual.  If you don't have a college degree your job prospects are grim.

But this is kind of like saying that if you stand in the movie theater you'll get a better view.  That's true for the individual, but causes a collective problem.  Now everyone needs to stand to have a view that will be no better than if everyone had just continued to sit.  Cut the loans off and fewer people will go to school, but this doesn't mean demand for workers will necessarily change.  These days some employers are demanding a 4 year degree even for work that in the end is simply manual labor.  If fewer people have degrees employers will settle for workers without that degree.

Unfortunately for the young they don't have powerful advocates.  Educational institutions lobby hard, especially to Democrats, and they prefer that the loan money continues to flow.  It's wrecking the lives of the young, saddling them with crushing debt to acquire a degree that doesn't do much in terms of making them productive employees.  Similarly Republicans aren't interested in doing what it takes to solve the problem (returning subsidy to it's former levels).  Yes, I understand that this incentivizes people to acquire loans that may not be necessary, but this also is a factor in the loan problem.  As with so many other issues the harm here is a bipartisan effort.  Neither the Republicans nor Democrats are representing people.  Only the wealthy interest.