The mythology of “college for all” has produced a perverse financing system for higher education. Because policymakers regarded a college education as necessary to opportunity, they made it a public obligation to facilitate any student attending any school, regardless of cost. Because they regarded a degree as sufficient for success, they presumed that the return on investment would always be high. And having granted “education” a sacred status unlike other goods and services, they gave the associated debt a sacred status as well: not to be discharged in bankruptcy.
The results have been disastrous. College costs skyrocketed, fueled by government subsidies designed to grow right along with tuition. Young Americans and their families were encouraged to assume whatever debt necessary—by not only policymakers promoting their loan programs, but also a culture that equated the practice with “investing in your future” and institutions that cashed the checks upfront and were never held accountable. In how manymovies does the teenager, discovering his family’s financial troubles, concede gloomily that he can abandon his first-choice school and attend the state university nearby, only for a determined parent to insist, no, we will find a way?
In reality, meanwhile, students are more likely to drop out of college or else land in a job that does not require their degree than they are to graduate into a career. Research suggests that, for men, the selectivity of their school has no effect on future earnings; for women, more selective schools lead to more hours worked and lower marriage rates. The United States spends more than $25K per student—second only to Luxembourg among developed economies and more than twice the $10K–$11K spent in countries like Denmark, France, and Germany. And student loan debt has become the nation’s largest form of non-mortgage debt, sextupling from $260 billion in 2004 to $1.53 trillion at the start of 2020, by which point the U.S. Department of Education reported that about 20% of borrowers were in default.
“Why is a household with relatively high student loan debt more deserving of government beneficence than a household with relatively high credit card debt, or with an auto loan it is struggling to pay off?”