08:09 – I see the interest rate on subsidized federal student loans doubled yesterday, from 3.4% to 6.8%, bringing them in line with the rates charged on non-subsidized loans since 2007. Yet another failed federal program. As usual, it started with the best of intentions–making sure that qualified students could afford to attend college–and, also as usual, it quickly degenerated into a hopeless, expensive mess. The worst effect of this student-loan mess is never mentioned: it’s hugely increased the cost of a college education for everyone, including those of us who pay for it themselves.
One of the fundamental laws of economics is that when you subsidize something you get more of it. And, boy, have we gotten more college graduates out of this deal. The problem is, most of them aren’t qualified to do anything more than counter work at McDonalds or Starbucks, jobs that obviously don’t require a college education in the first place. These kids could have saved themselves a lot of time, money, and heartache by skipping college and going straight to work in the dead-end jobs that are all they’re qualified for anyway. And they wouldn’t have had tens or hundreds of thousands of dollars in debt to pay off.
The solution to this problem is easy, and should have been obvious all along. No taxpayer tuition subsidies and no federally-guaranteed student loans for students who choose to major in non-rigorous subjects. If you want to major in science or accounting or medicine or engineering or nursing or agriculture, fine. The taxpayers have an interest in maintaining an adequate supply of people qualified in these fields. If you want to major in English literature or sociology or European history or women’s studies, fine. Pay your own way. Don’t expect the taxpayers to pay for your four-year vacation, either directly via taxes that support state universities or indirectly by taxes that support federally-guaranteed student loans.