In Colorado, and across the nation, Senator Bernie Sanders is clearly striking a chord with a large swath of young people. College students, especially, are flocking to Senator Sanders with the hope that they might be delivered from the skyrocketing cost of their college education.
When my father attended college, students were able to pay for their education by working part-time during the school year, and full-time over the summer. Today, that is practically impossible.
In the last 30 years, college tuition expenses have increased more than 500 percent – almost double the rate of health care costs. This explosion in cost has saddled the average student with over $30,000 in loan debt. Taken together, the total amount of student debt in the country now sits at $1.2 trillion – which is more than both credit card debt and car loans. It’s no wonder that young people are looking for solutions to this crushing financial burden.
The reality, however, is that Senator Sanders’ pie-in-the-sky idea to make college “free” is certainly not the answer.
How come? Well, by making college free, demand would drastically increase. And when demand rises, so do prices. If you think that higher education is expensive now, just wait until it becomes free.
If the crisis of skyrocketing college tuition costs is actually going to be fixed, then policy makers must attack the root of problem, not just the symptoms. So, who is the main culprit? The federal government. And who does Senator Sanders want to fix it? The federal government.
Like with so many of our country’s fiscal problems, the higher education bubble started out with a good intention – to increase access to college. But as the government got more and more involved, costs began to soar.
What makes matters worse is that the government now runs the entire student loan system. So every time a student takes out a loan, the college gets paid upfront. Then, the student owes the money to the government, not the school. Since the government spent tax dollars to pay the college tuition to begin with, taxpayers are left holding all the risk if students default on their loan.
This arrangement greatly benefits colleges because no matter how much they raise tuition, or who they choose to accept into their school, they are still guaranteed payment from taxpayers. Some would label this corporate welfare. So the $1.2 trillion-dollar question is, “if government isn’t the solution, what is?”
Proposals such as “risk-sharing” could be one such solution. This idea would make it so that colleges share a portion of the risk if their students fail to repay their loans. This, in turn, would encourage schools to make sure that they are adequately preparing students for the workforce. There is no doubt that competition is a key ingredient to both increasing quality and driving down costs.
Although risk sharing is far from a silver bullet, making sure the colleges have skin in the game would be a good start in bending the overall cost curve.
While lowering the cost of college is certainly one problem that needs to be addressed, we also must deal with the reality that far too many college graduates can’t find good jobs in this economy. In fact, nearly 7 million Americans have gone at least a year without making a payment on their federal student loans.
Policy makers must realize that appealing to young people doesn’t just mean addressing the cost of higher education, but it also means creating a dynamic and robust economy for them to find employment after college. The best way for our country to invest in future generations is not by promising bigger government programs, but instead allowing the free market to drive entrepreneurism, innovation, and economic prosperity.
Michael Fields is the State Director for Americans for Prosperity-Colorado the largest non-partisan, free-market grassroots organization in the state with over 127,000 Colorado activists.