Free College? Not Really…
Free college tuition.
It became famous as one of Bernie Sanders’ biggest campaign promises last time around.
And now the same idea is starting to rear its head again ahead of 2020…
Only this time it’s starting with Elizabeth Warren and a new plan to forgive up to $50,000 in student loan debt for every man, woman, and child. (Just about.)
In case you have any doubt, I’ll be taking the other side of the argument today.
But before we get into it, a quick bio on each side of the debate…
Elizabeth Warren says:
“Higher education opened a million doors for me. It’s how the daughter of a janitor in a small town in Oklahoma got to become a teacher, a law school professor, a U.S. Senator, and eventually, a candidate for President of the United States. Today, it’s virtually impossible for a young person to find that kind of opportunity.”
Your humble author says:
“Higher education might have opened a door or two for me, mostly because my early Wall Street employers demanded a college degree. So it’s how the son of a low-level state employee in a coal mining town in Pennsylvania got to work in New York City, eventually started his own business, and accumulated a seven-figure net worth by age 40. Today, it’s just as possible for any young person to find that kind of opportunity.”
I should add that I went to college on a merit-based academic scholarship, which paid the vast majority of my tuition at a private university. My parents worked and saved while I was younger and generously covered the things my scholarship didn’t.
Or at least impossible today, according to Warren.
Oh, by the way, in case you don’t know…
Elizabeth Warren has worked for colleges most of her adult life. Her last gig, before winning a Senate spot in the 2012 election, was at Harvard.
Between 2010 and part of 2011, she earned $429,981 there… Other financial disclosures showed Warren collecting an average annual Harvard salary of $350,000 for 2009 and 2010…
Her husband, Bruce Mann, is still a professor there. Last year, the couple claimed $402,897 in income from Harvard on their tax return.
In other words, Warren and her husband have earned anywhere from half a million to a million dollars a year working as college professors over the last decade.
Me? I’ve never worked for a college. Just sayin’.
Anyhow, Warren’s basic proposal is:
- Forgiving up to $50,000 in student loan debt for 42 million Americans in households earning less than $100,000 a year…
- Plus, reduced forgiveness amounts for another 3 million households making less than $250,00 a year…
- Increasing federal spending to make tuition and fees free for all students at public two- and four-year public colleges…
- Expanding grant programs to cover additional costs like housing, food, books, and child care for lower-income and minority students…
- Then reforming the higher education system “that created the crisis in the first place.”
Warren’s camp says this would cost about $1.25 trillion over 10 years.
Do You Care?
Let’s simply call this plan what it is:
A universal taxpayer bailout of anyone who took out college loans and hasn’t paid them off yet.
We wouldn’t be erasing the debts that have already been incurred… We’d simply be spreading them out across the entire country.
Already paid off your own student loans? We don’t care.
Never went to college and started a successful hair salon or pizza parlor? We don’t care.
Personally collected millions of dollars as an overpaid college professor during a decade when college costs soared 66%? We, uh, don’t care.
Or do we?
According to the College Board, tuition and fees at a public four-year college averaged $9,648 for an in-state student during the 2016-2017 academic year. Ten years earlier, they averaged $5,804. That’s a 66% increase over a single decade.
Using the same academic years and student groups, the average room and board costs went from $12,837 to $20,092. That’s a 56% jump.
Looking at individual annual tuition increases over the last few years – which are the SLOWEST experienced since the 1970s – we still see 2.9% in 2014-2015, 3% in 2015-2016, and 2.4% in 2016-2017.
And if we start talking about out-of-state students or private universities, the numbers just get bigger.
Even if we try to factor in inflation and adjust all the numbers to 2016 dollars, the College Board says average published tuition and fees at public schools rose 9% between 2011 and 2016, following a 29% increase between 2006 and 2011.
Please remember that these periods include a major real estate collapse… the largest financial crisis since the Great Depression… and very slow overall inflation in many other parts of the U.S. economy.
So, what has really been sending college costs soaring in the first place?
I will answer that question, which doesn’t require an advanced degree to comprehend, in part two tomorrow…
To a richer life,
— Nilus Mattive
Editor, The Rich Life Roadmap