The Rising Tide Of Education Subsidy

But what about the rising tide of education subsidies? Last week the House of Representatives passed the College Cost Reduction Act of 2007 by a vote of 273-149.

"This bill is a remarkable step forward in our efforts to help every qualified student go to college," said Rep. George Miller, D-Calif., chairman of the education and labor committee and author of the legislation, in a statement. "With this bill, we are saying that no one should be denied the opportunity to go to college simply because of the price."

The bill increases Pell Grant limits, provides that graduates won’t have to pay more than 15 percent of discretionary income in repayments and provides loan forgiveness for certain “public servants” after ten years and for everyone after 20 years. This will all be paid for by a reduction in subsidies to student loan lenders.

Of course, with more money sloshing into colleges there’s a risk that some colleges might increase tuition. The bill’s sponsors have thought of that. Here’s how Yahoo’s Anya Kamenetz describes their plan:

Starting in 2011, any college with high, outlying tuition increases would have to submit a report to the education secretary explaining why. After two consecutive years, the college would be placed on “affordability alert status.”

It doesn’t take rocket science to see where all this will end up. It will encourage people to minimize payments on their student loans. It will encourage twentysomething slackers to put off the day when they grow up and get a real job. The reduction in subsidies to the student loan industry will wash through into higher payments for students. And the “affordability alert status” is a joke.

The beautiful thing about subsidies, from the point of view of an experienced political practitioner like Rep. Miller, is that they make people more dependent on the government. When you jack up the price of college with subsidies then more and more people find that they have to turn to the government for help in paying for their education.

Eventually the rising tide of subsidy puts everyone out of their depth.

It’s the system that FDR set up in the 1930s, as Amity Shlaes points out in The Forgotten Man: A New History of the Great Depression. Politics had always catered to interest groups, of course.

“But Roosevelt systematized interest-group politics... to include... labor, senior citizens, farmers, union workers. The president... ministered to those groups, and was rewarded with votes.”

Schlaes observes that Roosevelt’s great landslide of 1936 was the year that peacetime federal spending first exceeded state and local spending. It was that fateful year that created the entitlement state and the central reality of politics today.

While Rep. Miller is flooding higher education with more subsidies teacher Nancy Coppock of Texas reminds us millions of students are out of their depth when it comes to basic literacy. Yet more money is not the answer.

“Teaching reading is practically free. I used [a] class set of paperback young adult literature which cost between $75 to $125 per set, which were used year after year. The true value came from my own heart and soul.”

As a special-ed reading teacher Nancy has a more down-to-earth view of education than Rep. George Miller.

“[T]he best thing I could do for mid- to below-average students, many minority and poor, was to make sure they could read to the best of their ability.”

The crisis in education is not that price is scaring kids away from college even though, to a member of the academic middle class, life without a college education is scarier than a Stephen King novel.

The crisis is not even the scary education spending numbers for 2007 from usgovernmentspending.com:

United States Federal, State,
and Local Government Spending
Fiscal Year 2007
Amounts in billions of dollars

	Fed	Gov. Xfer	State	Local	Total
Education	103.4	-86.6	234.0	541.6	792.3
— K-12	40.0	-86.6	7.0	509.4	469.8
— Higher	23.9	0.0	208.9	32.2	264.9
— Other	39.5	0.0	18.1	0.0	57.6
Spending: actual, budgeted, estimated, guesstimated

The crisis is that the government spends $469.8 billion on K-12 education every year yet millions of mid- to below-average students don’t ever learn to read.

You can’t help feeling that somewhere out there in that $792.3 billion-a-year EducationLand someone just doesn’t care about kids.

Christopher Chantrill blogs at www.roadtothemiddleclass.com. His Road to the Middle Class is forthcoming.

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