Federal Government to Blame for Rising Education Costs

The Rutgers-Camden Campus in Camden, New Jersey.

The rising cost of higher education (specifically Rutgers) has reached the front page of the Courier-Post, Save Jerseyans.  The article, Student loans are becoming a burden, published yesterday discusses not only the rising cost of receiving a collegiate education but also the debt student incur while pursuing the degree of their choice.  The author blames,

dwindling [state] government aid, more expensive housing and academic buildings to attract students, and more administrators

…for the rising prices leading to the students going further into debt.

The growth in education costs over the past thirty years can be tied back to one entity: the Federal Department of Education.

Since its inception in 1979 by President Jimmy Carter, the Federal Department of Education has created a problem which we see every time the government subsidizes an industry.  It has artificially raised costs and created a bubble that will undoubtedly have repercussions across the economy.

The student loan debts are inching ever closer to one trillion dollars a number that crushes the futures of young Americans.  This problem will likely increase after a 2010 decision by President Carter err… President Obama’s decision to make college aid only available through the federal government.  New Jersey is scheduled to receive over a billion dollars in direct student financial aid alone.

The federal government has made receiving these loans far too easy, Save Jerseyans.  Colleges and universities can now count on students receiving aid and can factor this into the cost of the tuition.  This allows them to raise the price of attending their institution.  When tuition goes up, the federal government will send more out in loans.  It’s a vortex that continually sends costs spiraling higher and higher.  Since the 1980, adjusted for inflation, Rutgers University’s tuition has gone up nearly $10,000.

The growth of these loans have allowed for the expansion of institutions administration and upgrading of school buildings.  With more money on hand and expected to be on hand colleges and universities will attempt to upgrade their campus and hire more staff.  These institutions are becoming larger than they are meant to be because of government interference in the economy.

The student loan bubble bears a striking resemblance to the sub-prime mortgage bubble of 2008.

In 1977, nationally renowned peanut farmer and newly installed President Jimmy Carter (see a pattern, Save Jerseyans?) signed into law the Community Reinvestment Act that would begin forcing banks to give loans to low-income individuals that would normally not receive them.  This subsidized the housing market and made banks artificially bigger on the banks of individuals that could not pay back the amount of money they had been lent.

These government programs stem from the utopian ideal that everyone should get a house and everyone should get a college education gratis.  While these are ideals we can all agree on in principle – that each person should have the opportunity to achieve these things if they can attain them – it is not the business of government to give them to us as financed by someone else!

The author of the Courier-Post story followed the dots back to 1980, but did not follow them back far enough.

The Department of Education has brought the Free Government Cheese Express through the station far too many times.  The state freezing funds at 2000 levels is secondary to the federal government’s programs.

It is time to push the federal government out of what is best handled by the states.  Education is a state and local matter.  For the federal government to be involved at all is an overreach of its authority.

Sadly, I see the student loan bubble bursting with no real reform like that which followed the 2008 housing crisis.  The problem is not a lack of government but is typically the cause of too much government.

As President Reagan once said, “The nine most terrifying words in the English language are, “I’m from the government and I’m here to help.”


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