In the 1960s, Ronald Reagan helped kill free higher education in the United States. Today, in the face of the student debt crisis, the best fight the Democrats are mustering is to try and lessen the pain of Reagan’s legacy.
Everyone agrees we are in a student debt crisis, even the Federal Reserve. Over 38.8 million Americans have student debt (as of the end of 2012). 7 million of them are in default on their loans. Worse still, it is now accepted as fact that college, whether public or private, will be an undue financial burden that students may never get out of. The best one can hope is for a parent or relative to plan early for college. Put money away in a 529 plan (with Wall Street skimming money, as always, off the top).
It wasn’t always this way.
Once Upon A Time, America Had Free Higher Ed
As Mike Konzcal and Aaron Bady wrote in “From Master Plan to No Plan: The Slow Death of Public Higher Education,” there really used to be free higher education all across the state of California. And then, Governor Ronald Reagan took office, griped about the “orgies” happening on campuses, and proceeded to dismantle free higher education in the state:
“Elected governor of California in 1966 after running a scorched-earth campaign against the University of California, Reagan vowed to ‘clean up that mess in Berkeley,’ warned audiences of ‘sexual orgies so vile that I cannot describe them to you,’ complained that outside agitators were bringing left-wing subversion into the university, and railed against spoiled children of privilege skipping their classes to go to protests….
When Reagan assumed office, he immediately set about doing exactly what he had promised. He cut state funding for higher education, laid the foundations for a shift to a tuition-based funding model, and called in the National Guard to crush student protest, which it did with unprecedented severity. But he was only able to do this because he had already successfully shifted the political debate over the meaning and purpose of public higher education in America. The first ‘bums’ he threw off welfare were California university students.”
Reagan won, and the Democrats have never meaningfully try to reverse the trend Reagan set. As Peter Beinart wrote in “The Rise of the New New Left”:
“In 1993, Bill Clinton brought the Democrats back to power by accepting that they must live in the world Reagan had made”
President Obama today talked about making college “affordable.” He spoke of a college education as the “single most important investment that Americans can make in their futures.” Note the framing: college is an “investment,” and one that is paid for by “Americans,” not by the government. Instead of supporting the public with free tuition, Democrats now unquestioningly support the student loan machine.
This is not because the government does not heavily subsidize education. The problem is, who are we really subsidizing with this federal money?
Your Taxes Pay Predators: We Have Money for Education, But We Waste It
One in ten college students attend private, for-profit colleges. These schools are often predatory, sell students degrees that cannot get them work. A team from the Government Accountability Office actually went undercover as potential students in 2009-2010 and found that they were harassed and hounded by for-profit college reps eager to increase enrollment. The GAO report found that these for-profit colleges “encouraged fraud” and had “deceptive and questionable marketing.”
And despite their predatory practices, our Federal Government continues to send taxpayer money their way. Rory O’Sullivan writes for US News that “75% of the revenue of for-profit colleges come from taxpayer-funded financial aid.” And from 2011-2012, 21% of all Pell Grants went to for-profit colleges ($7.18 billion out of $33.5 billion total. See the Dept of Education’s Pell Grant End of Year Report, page 87).
Obama’s Band-aid: Making Student Loans “More Affordable”
Today, President Obama signed an executive order to try and help those who have a share of the over $1.3 trillion in outstanding student debt.
Previously, the Health Care and Education Reconciliation Act of 2010 limited payments on federal student debt issued after July 2014 to 10% of the borrower’s income. It also made loans issued in 2014 (and later) eligible to be forgiven to those who make “timely payments” after 20 years. Another law, the Pay as You Earn (PAYE) – Federal Student Loan Relief Program (passed in 2012), gave the same 10% cap and 20-year forgiveness to those who borrowed after Oct. 1, 2007, and received a disbursement of a Direct Loan on or after Oct. 1, 2011.
The executive order Obama signed extends the 10% cap and 20-year forgiveness to 5 million more borrowers, “opening it to those who borrowed anytime in the past.”
While this is a step, it hardly addresses the problem of outstanding debt. And it also does NOT affect the private student loan market, which the CFPB estimates to be at least $165 billion, and typically private loans have the highest, most crippling, interest rates.
But even after this new executive order, you are only eligible for the loan forgiveness after 20-years if you made “timely payments.” What happens if your student loan servicer is screwing up, and not properly processing your payments in a timely way?
Trust Corporations, Even When They Rob You Again & Again
And don’t forget that servicers have not shown themselves to be beacons of either ethics or efficiency. Sallie Mae recently paid out a $97 million settlement for overcharging members of the military, but they blamed their illegal actions on “processing errors.” Shahien Nasiripour reports today for the Huffington Post that, despite the settlement, “the U.S. Department of Education is seriously considering granting a potentially billion-dollar, decade-long contract to a former unit of Sallie Mae, the student loan company the Justice Department last month accused of cheating U.S. soldiers.”
In the end, the Democrats have conceded the Reaganite view: corporations should be trusted with everything. Even after they’ve proven again and again that they will rob from everyone.
Public Higher Education could be free. Strike Debt did the math. Will U.S. politicians keep using band-aids to stop a hemorrhage? Or will they reject the Reagan legacy, reallocate existing money, find $13 billion more, and make public higher education free?
