Is President Obama right about a looming student loan debt crisis?
It depends on how you define “crisis.” But there is a problem, and it is real.
What remains to be seen is whether or not the President – or anybody else, for that matter – is willing to face the real problem in higher education. Financing an education is not so much a problem, as is the stark reality that the cost of tuition consistently goes up, even when the price of other things declines.
It is a fact that over the last decade many “adjustable rate” student loans were issued, both by private lending institutions and government agencies. Just as they were intended to, the rates on those loans “adjust” upward. And on this point, the problem of student loan debt is similar to the mortgage crisis. Just as many Americans bought more home than they could afford, so also did many students “buy” more education than they could afford, or, at least, they bought their education under financial terms that eventually either have become or will become unmanageable.
But why is it that the price of college and university tuition generally only moves in one direction – upward? And why does the price of higher education rise, even when the prices of other goods and services in our economy decline? Most reports indicate that college tuition rates have continued to rise over the past four years. Yet during this same period, overall prices have mostly been flat or have dropped, even to the point where many economists have expressed fear about a looming deflationary cycle (the recent spike in global oil prices and the corresponding rise in other prices have been about the only exception to this rule).
The answer to this question is found in a very important fact. It is a consistent agenda item within institutions of higher learning to offer as many low cost, and even “free” tuition programs as possible. Whether you’re examining state run colleges and universities, or private institutions, look in to the details of school’s budgets and the agenda becomes clear. It is a point of pride if, year after year, when institutions can report that they issued more “scholarship” programs that are doled-out according to ‘financial need.”
A glaring admission of this came to light back in 2009, shortly after President Obama took office. In one of his first college commencement addresses that he would deliver as President, Mr. Obama traveled to Tempe, Arizona, home of Arizona State University. In a speech that discouraged what the President labeled the “selfishness” of business and for profit enterprise, Barack Obama admonished the students to instead deny themselves the pursuit of the “corner office” and pursue government employment, and charitable non-profit work.
These remarks from the President were not surprising, and were consistent with his disdain for private enterprise. What was a bit shocking, however, were the comments from the man to precede him at the podium, ASU President Dr. Michael Crowe.
Dr. Crowe began his speech of introduction with glowing remarks about President Obama. “No national leader before you,” Dr.