Calling All Political Strategists …
[Guest post by DRJ]
What do you think about this college tuition idea from Senator Hillary Clinton?
From Reuters:
“Democratic presidential front-runner Hillary Clinton proposed eliminating federally guaranteed student loans on Thursday, a move that would shake the foundations of the $85 billion student loan industry. Lenders such as Sallie Mae, Citigroup and Bank of America do a big business in extending federally guaranteed loans to college students.
In a campaign Web site posting, the New York senator said she would pay for a range of higher education reforms “without increasing the deficit by eliminating the guaranteed student loan program.” The guaranteed loan program was hit by deep federal subsidy cuts earlier this year under legislation passed by Congress and signed by President George W. Bush.
A spokesman for America’s Student Loan Providers, which represents the industry, said: “The student loan community hopes that Sen. Clinton will reconsider this part of the proposal and recognize the value to borrowers of choice.“
Here’s a link to this language in a press release at Senator Clinton’s website — scroll down to the last paragraph at the bottom of the page entitled “Cost.” This appears to be part of widespread college funding reforms that would do for college tuition (HillaryEducation?) what HillaryCare would do for medical care.
— DRJ
DRJ – Should that be true, it will be interesting to see thw reaction from the Left. I cannot even imagine the outrage that the Left would generate if President Bush had proposed this.
JD (a248f3) — 10/11/2007 @ 3:47 pmI’m pretty outraged by the suggestion. While I’d certainly concede that the college loan program is helping to drive up the cost of education, that isn’t the whole story. 1: Students are *quite likely* to be unable to get loans for school: they have no credit history, so they are a terrible risk by the normal financial models. 2: the availability of a good educaiton to anyone who can profit from it is fundamental to our economy, and (I would argue) to our liberty; it would be a terrible thing if that were to go away.
Now, if she’s talking about replacing loans with grants or other aid, I’d be all in favor. But it doesn’t sound like she is.
aphrael (e0cdc9) — 10/11/2007 @ 3:55 pmIf this is just limited to loans, it would be one of the worst political calculations she has made. At least loans are supposed to be repaid, so to me, they are not a particular sore spot. It will likely have the added benefit of driving down the cost of college.
JD (a248f3) — 10/11/2007 @ 4:06 pmShe can’t make up her mind … after all she has millions of ideas that America can’t afford. First of all, anyone who wants to can go to college and go to one that is affordable. Second, there is TOO MUCH loan money available. There is no motivation for colleges/universities to keep costs down.
zaphod4239 (0afe54) — 10/11/2007 @ 4:14 pmDumb idea but right now she is doing the Huey Long thing “Chicken in every pot and fix all the potholes”
voiceofreason (7796e1) — 10/11/2007 @ 4:17 pmEventually, she will get around to where she really wants to be, and propose the old Soviet model.
You all know what that works out to be:
We pretend to work, and they pretend to pay us!
Ain’t equality wonderful?
Another Drew (8018ee) — 10/11/2007 @ 4:40 pmIt is inconceivable, inconceivable that Hillary would propose cutting any federal program aimed at helping those in ‘need’… which means that there’s got to be a catch somewhere.
And the catch? It appears that she’s ‘cutting’ the student loan program only to the extent it involves private lenders, and more than offsetting those ‘cuts’ by having the government make loans directly to students… and justifying this extra spending by eliminating the phase out of the estate tax.
In other words, she’s true to form: targeting private enterprise, targeting the ‘rich’, offering more of a handout to voters, letting higher ed know they won’t ever have to worry about tuition dollars drying up and increasing the role of government in more and more of our lives.
As policy, I hate the idea. As a political ploy, I have to applaud her. I dislike almost everything about her and what she stands for, but have to admit she’s pretty good at playing the game. Tis a shame there isn’t anybody on the GOP side of the aisle who has the guts to take her on and the brains to do so effectively.
stevesturm (d3e296) — 10/11/2007 @ 4:40 pmBarack Obama must be smiling tonight.
Alan (a9540f) — 10/11/2007 @ 4:56 pmJust what the country needs, more Liberal Art majors waiting tables to pay off their school loans.
Perfect Sense (b6ec8c) — 10/11/2007 @ 5:06 pmI agree, in principal, with slashing loan subsidies, although I’m sure Hillary will do something to screw it up.
Government subsidies is certainly one of the things that’s propped up the massive increase in education costs over the past couple of decades.
What’s really happening is that students are suddenly able to pay tuition amounts way beyond their means. Instead of price factoring into the equation, the cost of an education is virtually ignored.
As a result, students, in my opinion, are paying less attention to the potiential employment opportunities they’re getting with their degrees. Cue an endless march of liberal arts grads with no employability and massive debt loads.
And, oh joy, their debts aren’t dischargable in bankruptcy, so they become virtually indentured servants to the banks who so willingly slathered credit on them back when they should have been making financially responsible decisions about what degree to choose.
Phil (6d9f2f) — 10/11/2007 @ 5:06 pmThe federal student loan system for years has been rife with taxpayer waste and inefficiency. The for-profit sector has been lining its pockets in a program that hasn’t been pruned in 50 years. The impulse to go to direct lending isn’t going away – no matter who wins next year.
steve (b223fb) — 10/11/2007 @ 5:17 pmHow are college students supposed to know what their degree will be worth over their lifetime, phil?
Look at all the recent computer science grads who are now competing against Indian and Chinese programmers willing to work for $5 an hour.
Talk about a bad investment.
alphie (99bc18) — 10/11/2007 @ 5:21 pmI am left wondering how they can make the statement “The new college tax credit and other initiatives in this agenda will cost approximately $8 billion per year,” when they state that their intention is to raise the Hope Tax Credit from $1650 to $3500, raise the Pell grants, raise the AmeriCore grants by over 50%, and so on. They don’t supply enough information to crunch the numbers, but I am left thinking that the programs will cost more than estimated, something quite common with government programs. Clinton’s advisers may be right, but I would like to see more information before I’m willing to accept that figure is correct. People have a habit of underestimating the costs when trying to sell the programs they are sponsoring, and Sen. Clinton has given me no reason to believe she is different in that respect. Her husband and his administration sure weren’t.
Fritz (0c2594) — 10/11/2007 @ 5:45 pmIf we can get out of Iraq we spend far less than direct student loans, low-to-middle class children’s health insurance, and a host of other expenditures could possibly cost. But you right-wingers never want to talk about that debilitating off-the-books spending.
nosh (53dd5b) — 10/11/2007 @ 6:24 pmShe’s shifting a federal government gaurantee this only experiences a cost upon default, and there are recovery options available, for a drain on the Treasury in the form of a tax credit, paid for by estate taxes.
What I don’t find in her press release after a cursory reading is any limit on eligibility for this tax credit. Since a tax “credit” is a dollar-for-dollar deduction from taxes owed, does this mean taht Bill Gates gets the same tax credit as they guy who mows my lawn to put his kid through college?
I didn’t think so. So Hillary, what is the income threshold where this credit is lost?
In other words, lower and middle income wage earners who pay little if any income tax now will not only pay less in income taxes, you will be writing them bigger checks in the form of tax refunds once they pencil in their “college tuition tax credit” next to their “earned income tax credit”.
I think that sound you heard is financial institution representatives jumping off the Hillary bandwagon.
WLS (bafbcb) — 10/11/2007 @ 6:31 pmI’ve noticed that there are two things the cost of which regularly outstrips inflation:
1. Health Care.
2. Post-Secondary Education.
What do these two things have in common? They are largely paid for by third parties, not by the consumer.
It’s not hard to construct a theory that ties the lack of cost-control incentive on the part of the consumer, to the uncontrolled cost escalation on the part of the provider. It’s a completely price-inelastic market!
I leave the remedy as an exercise for the reader….
Kevin R.C. 'Hognose' O'Brien (88bf29) — 10/11/2007 @ 6:38 pmThere is a huge misconception regarding the value of a college education. This misconception is based to a large degree on the well known fact that college grads earn more than high school grads and high school grads earn more than high school drop outs. However, individuals who get college degrees are generally smarter and generally more motivated. Individuals who are marginal college material and who get a college degree rarely earn significantly more than they would earn with out the degree. in other words, an individual with the smarts and ambition are more likely to do well in college and in their career.
Incurring 30-40k of student debt to only have 4-5k a year increase in earning capacity (for the marginal college guy) is generally a loss on a cost benefit analysis.
joe - dallas (138e46) — 10/11/2007 @ 7:37 pmfollow up to my post #17. I do feel that a college education has value. There are situations that a qualified individual benefits by receiving financial assistance to go through college when he/she would not otherwise have the werewithal to go to college. But for vast majority of individuals who would not otherwise go to college (due more to apptitude, ability,etc), the extra costs provide little benefit. It is for these marginal individuals which the programs are designed to attract and for which the colleges love the additional revenue.
joe - dallas (138e46) — 10/11/2007 @ 7:47 pmIsn’t a key voting block for the Dems the college age population, hence their continual focus on reducing the cost of a college education and increasing its availability? There’s no way Hildebeast is going to risk screwing up that voting block with a faulty program, unless this is another one of her nonproposal, proposals like the baby bonds.
daleyrocks (906622) — 10/11/2007 @ 8:35 pmWhy don’t we abolish money and replace it with Hillary Credits?
I should get a job with these people, I could think up this stuff in my sleep.
Glen Wishard (b1987d) — 10/11/2007 @ 11:25 pm