Johnston-Yurgine: College costs can be crushing
Ken: Joe, you wanted to discuss The Mueller report? In summary, the special prosecutor’s two-year long investigation now is history, finding no evidence of criminal collusion with Russia and making no charge of criminal obstruction of justice. Period! ’Nuff said. Let’s move on to a new topic. Besides advocating Donald Trump’s immediate impeachment, Democratic 2020 candidate Sen. Elizabeth Warren loudly has been a champion of a two-fer package: canceling existing student debt up to $50,000 and free college tuition for all. As a consequence, $630 billion of the $1.5 trillion of federally held student debt would be erased. Interestingly, 10 years ago, that debt was taken over from commercial banks and woven into Obamacare, anticipating using the interest payments to defray some of the cost. That didn’t work out so well because of a high rate of default. Together, forgiving debt and free tuition will run to an estimated $1.5 trillion during 10 years. But who pays? We do, of course. And there’s a new term floating around, as scary as a rattlesnake: “wealth tax.” The plan is promoted as making the rich “pay their fair share,” but we know the middle class is going to have to pony up as well, thus further polarization along the class divide.
Joe: Some of Warren’s ideas on student debt reduction do not make a lot of sense, which perhaps is why she is running third in her home state behind Joe Biden and Bernie Sanders. If half of all student debt is owed by the highest earning quarter of the population, canceling that debt would be a windfall to those with a lot of money. Why would you want to do that? But answer this question. Instead of free college tuition for all, should there at least be free in-state tuition at state supported colleges and universities for students who want to go to college but can’t afford it because of lack of income or support?
Ken: Those are good questions, and for the most part, as I understand things, Ms. Warren has them covered. Free tuition for all applies to “public” universities and colleges. She envisions a partnership between Washington and the states. Also, the plan includes means testing for student debt forgiveness — canceling up to $50,000 for income up to $100,000 and phasing out to $0 at $250,000. Additionally, the wealth tax would apply to “ultramillionaires,” those with at least $1 billion assets, or about 7,500 U.S. households. My first thought is a wealth tax would require a new Constitution amendment since the 16th Amendment, adopted in 1909, states “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived …” And just imagine the complexity of administering such a tax. How can the value of relatively illiquid assets be fairly determined? Put it all together and imagine the unintended consequences. In Washington. To our whole national economy. To academia.
Joe: Enough said on Warren’s plan. It’s not something realistic. It does not seem to be generating a lot of support. It’s a legitimate purpose of both the federal and state governments to help people attend college, but not if there is no money lying around to pay for it. On the federal level, the tax cut has not increased revenue. Rather, it only has produced more borrowing and debt. Budgetary restraint is not happening. Military spending is enormous. Wars are costly. The last time I checked, we had 662 bases in 38 countries costing more than $100 billion annually, which is about 1/6 of the defense budget. There’s no money left for infrastructure spending and education. On the state level, Illinois financially is in bad shape. The College Illinois education plan did not pan out. Instead of free tuition for everyone, the Daily Journal suggested trying to make college costs more affordable. They make an excellent point. Education costs have soared, in part, because we have fitness centers and fancy dorms at colleges with cuts in state funding. Further, there are increases in administrative personnel. In 1988, for every 100 students, there were 23 college nonteaching employees. In 2012, there were 31 and I would bet today it’s even higher. When Obama was around, his proposed plan was to have free tuition only at junior colleges. That has in fact happened in certain parts of the country. In Ludington, Mich., for example, a resident student who graduates with a 2-point grade average can attend the junior college without paying tuition. But even if this happens, tuition free is not free college, because tuition accounts for only about 1/5 of a student’s college budget.
Ken: Actually, deficit hawks are getting crowded out of the media coverage lately. I think understanding the Warren proposal is worthwhile because sooner or later, something similar to that is going to become policy; the part about free tuition at public institutions anyway, loan forgiveness being another matter. I went through a quick calculation, using the University of Illinois website, of comprehensive cost for one undergraduate year majoring in English. For a full 30-credit load: Tuition, $12,000; fees, $4,000; living expenses, $15,000. Total: $31,000. About one-third of today’s college students collect Federal Pell grants, maximum $6,095 and no need to be repaid; eligibility depends on means testing. The cost of swollen college administrations is a serious matter and has been a large part of soaring tuition and fees. You could call the price hike a “diversity surcharge,” as it involves added campus security, as well as guidance counselors, psychologists, support personnel and tutors for some students who come from poor secondary educational programs.
Joe: Having said all of this, I ask how you would expand access to colleges and universities for students with almost no financial resources. Are they stuck with taking out college loans?
Ken: To answer your question I used a calculating application on the website of Carleton College, a 3,000-student selective Midwest institution. I answered the questions as a qualified 18-year-old senior at Kankakee High School with two siblings living with a single parent below the U.S. poverty line. The comprehensive fee — room, board and tuition — is $71,300 per year. She would need to pay $2,000, be allotted $2,400 for a campus job and receive $62,400 as a needbased scholarship. That would leave her with a loan of $4,500 per year, or $18,000 after four years, and if that doesn’t seem worth it, my imaginary student should just go get a job.