Somebody—please—tell President Obama that the idea is to reduce entitlement programs!
The new entitlement: a college education. As the Wall Street Journal notes today, that is the outcome of the president’s proposed changes to our current college loan program.
The president has added already $1 trillion over a decade to the federal budget by taking college loans out of the hands of private banks. Now, the president wants to speed up “income-based repayment,” which is scheduled by law to go into effect in 2014.
The problem with income-based repayment is that it can turn into non-repayment:
Assuming the panel approves these rules eventually, they will cost taxpayers $575 million a year, according to the Congressional Budget Office's scoring of the 2010 law. Once in effect, borrowers will not have to pay more than 10% of their "discretionary income" each year, regardless of how much they owe. The government defines discretionary income as the difference between the borrower's adjusted gross income and 150% of the federal poverty line. If the money isn't completely paid back in 20 years, the remaining debt will be forgiven.
That's right. Wait 20 years and, presto, you're student debt-free.
I don’t know what kids are learning in college these days, but this is just about the worst lesson possible. It is morally wrong and financially irresponsible. Here is the message: go to school, get an expensive education, and stick it to the taxpayer.
If you don't want to game the system over a two-decade period, there's another scam: the loans of anyone who takes a “public service” job after graduation are forgiven immediately. Message: so-called public servants are superior to people who go into business or corporate America (where they may actually one day create jobs!).
Another really bad idea is that everybody should go to college:
The larger picture is that the President is pushing hard to turn college into one more new entitlement, regardless of cost or course of study. He said in Denver that "college isn't just one of the best investments you can make in your future. It's one of the best investments America can make in our future."
So, he added, "we want you in school."
This is so wrong. Not everybody needs to go to college. Not everybody should go to college. It was called higher education for a reason. There is nothing wrong with not going to college, but there is something wrong with paying a lot of money to get a college degree that is meaningless.
I hope you will forgive me for quoting something I wrote a few years ago on this subject. It's a piece I wrote after spending the weekend in Petersburg, Va., where my grandfather was a boy. While walking Saturday morning, I stumbled upon a marker placed where my grandfather's beloved school had once stood.
On the marker were words the schoolmaster told all the boys (I’d heard it many times from my grandfather):
"You may not all be scholars, but you can all be gentlemen."
It was no disgrace back then not to go to college; what would have been a disgrace was borrowing the money to go to college and not repaying it.
But that was a pre-entitlement world. Mark Steyn makes the point in his new book, After America, that it was "eight grade America" that won World War II, created prosperity, and produced a lot of great music.
By the way, speeding up income-based repayment will probably take more than a year. President Obama must work fast or be re-elected.