Bernie wants to shell out 1.5 trillion and forgive all student debt. That’s giving away OPM – ‘other people’s money’. Can you imagine having just paid off your $50k loan and then have that happen – and then get taxed for everybody else’s education costs on top of that? Then, what about next year’s college freshmen, and the class ten years down the road. How would we pay for all college education in perpetuity? What the hell would we even be paying for? Should we essentially be rewarding Brainfried University for pushing out a unemployable liberal studies dweeb at a cost of 100K? What happens when said universities understand that money will be printed on their behalf and their tuition doubles over the next 2-3 years and professors all drive Mercedes Benzes? Bernie is a total idiot when it comes to basic economics.
Part of me is sympathetic to some of the concept though. My long memory remembers the bank bailouts ca. 2008. Does TARP ring a bell to anyone here? We printed roughly a trillion dollars for the banks. They then took the money and ran. Programs were made. Big banks bought small banks. Very little filtered down to individuals and businesses. The economy did NOT roar back until long after that money was gone. It was a gift to the rich. So why not do a little something for the students who are hunted and tormented by loan collectors?
Here is what I’d propose:
- Don’t finance degrees that have no repayment potential. Weight the estimated future economic benefit of a degree before underwriting it. Isn’t that how we qualify the financing of real estate? If college X and professor Z wants to teach esoteric theory in the soft sciences and if some poor soul wants that bullshit degree, let the school find students that can afford to them pay for it out of pocket. Call it a ‘luxury’. Why would anyone knowingly send a lower- or middle-class kid down that road to repay that loan?
- Loan money to students at about the same rate as the banks acquire funds.
- Limit school loan profits to administrative fees.
- Require schools to accept the borrowed value or that borrowed value + % as payment in full for that education. Make schools accountable for tuition rates not to exceed the rate of inflation.
- Automatically consolidate loans upon graduation.
- Automatically index repayment to income for the first 2-5 years after graduation, at least for lower earners.
- Stress test for-profit schools or better yet, require that they be re-chartered as non-profit and subject them to public audits. Disengage any form of public financing from for-profit schools.
- Reinvest in trade and computer technology schools that provide certifications instead of degrees but put them on the same footing as degree programs.
- Recognize that certification-based education is progressive and long term and integrate it into ongoing employment programs
Bernie, start thinking a lot more broadly, but I’m not holding my breath.