Above Photo: Victoria Sarno Jordan
Bernie Sanders unveiled his free-tuition plan this week. The plan, which would eliminate tuition charges for undergraduate students whose families earn less than $125,000 annually, looks much like the proposal from New York Gov. Andrew Cuomo, and also like Hillary Clinton’s revised plan from 2015. Sanders’s plan would provide $47 billion to states to cover “tuition and fees” at public colleges with the requirement that states come up with the remaining $23 billion, thus making public college tuition-free.
While Sanders’s plan certainly does dedicate far more money (per student) than Cuomo’s or Clinton’s plans would, it’s ultimately doomed to fail — just like Clinton’s plan and Cuomo’s plan.
Here is why: Colleges are extremely adept at finding new and creative ways to get money from students. They can create new billable items that are not technically “tuition” or “fees,” or massively increase the price of existing items such as dormitory and cafeteria expenses; even if tuition may technically be reduced to zero, these other items will make up the difference! This was the fatal flaw with Clinton’s plan, and with Cuomo’s plan. Sanders’s plan is vulnerable to exactly the same sort of circumvention.
It is notable that none of these plans put into place any requirement that money be applied directly against what the students would otherwise be paying — or borrowing. Absent this, it is abundantly clear that these plans are all, essentially, massive giveaways to the states and the colleges they support. These plans set up a game of whack-a-mole, where the only obvious beneficiaries are the schools.
But these plans are terrible in many other ways as well. They do nothing to reduce college prices, which are far, far too high in the first place, and would surely soar higher with this new funding stream in place. Also, these plans would do nothing to crack the whip on the schools to improve their quality, or reduce the time to graduate, which has stretched from 4 years to 6.2 years for an undergraduate degree over the past couple of decades. Furthermore, these plans don’t touch graduate students, or private colleges.
What is most astonishing about these plans is that they do virtually nothing for the 44 million people who are shackled under more than $1.5 trillion in debt currently. The refinancing plans being proposed by Elizabeth Warren, Clinton and now Sanders would save the average borrower a couple of thousand dollars on average, and that will decrease as federal interest rates rise (which they will). This is insulting, given that the average undergraduate borrower is now leaving school with $37,000 in student loan debt.
These plans completely avoid the real problem: The student loan system is predatory and hyper-inflationary due to the removal of bankruptcy and other consumer protections.
It was reported last month that, in 2016, 1.1 million people were put into default on their student loans. This is up drastically from the year before, when 400,000 people were added to the default roles. About 20 percent of defaulted borrowers put their loans through rehabilitation, so while there are currently about 8 million people in default on the books, the actual number of defaulters is closer to 9.6 million people. If this trend continues, we will see this number swell to 12 million people by the end of the year.
Elizabeth Warren taught bankruptcy at Harvard, and knows well what is going on here. Hillary Clinton wrote a great bill 10 years ago that would have returned bankruptcy protections to all student loans. Bernie Sanders argued strongly during the primaries that Puerto Rico should have the same bankruptcy protections that other U.S. states have. That they are all clearly unwilling to fight for the return of bankruptcy protections to student loans, and are instead pushing these big-government, tax-and-spend boondoggles is exceptionally disappointing and astonishing.
And make no mistake: Voters were not impressed with these free-tuition plans during the presidential election. Yet the Democratic elite seem to be stuck on the proposition of doubling down on failure.
The 44 million voters who had nothing to vote for in the last election will grow significantly over the next two years, and they will be far angrier in 2018. If Democrats think that they can double down on this nonsense instead of doing what Warren, Sanders, Clinton, and many others know is right in returning bankruptcy protections to all student loans, these voters will punish them.