On Jan. 20, President Obama will announce in his State of the Union address a seemingly grand plan to make two years of community college “free” for American students everywhere as long as they maintain a “C” or better average. Of course, what he won’t mention is how the federal government is financing these costs through taxpayers and the states at $60 billion, according to Politico.
When the government proposes to give us “free” things, it is often the unseen costs that make us suffer. Moreover, if we accept the logic that education should be “free,” why can’t the government make everything else with a price tag free as well? You would think that our government would learn that such easy money leads to financial collapse after the 2008 housing debacle.
Nonetheless, the number of Pell Grant recipients for community college students has doubled since 2008 and only 20 percent of students who begin community college each year complete their program within 150 percent of the standard time, according to the U.S. Department of Education. The National Student Clearinghouse Research Center has also found that only 20 percent of community college students transfer to four-year schools, and only 72 percent of those will have finished or remained enrolled four years later. Overall, this is a small 34 percent of community college students actually completing their degree.
So Obama’s proposal, not too different from the current system, will simply be a larger federal handout to the community college system. Where is the incentive for community colleges to stop escalating their tuition and fees when the federal government -- through taxes -- pays the tab until we receive our massive sticker-shocking bills to pay off our debt after graduating? The average cost of tuition at colleges will continue to increase because of these federal government handouts to universities.
Even if the administration caps loan repayments at 10 percent of discretionary income and any remaining balance is forgiven by the taxpayers after 20 years, we are simply subsidizing the cost of college which has risen at more than twice the rate of inflation thanks in large part to federal subsidies.
This higher education bubble has led to over one trillion dollars in student loan debt. And while the Bureau of Labor Statistics shows that the unemployment rate for workers who only have a high school diploma is more than twice that for workers with a bachelor’s degree (8.1 percent vs. 3.7 percent), it’s also been disclosed by the Federal Reserve Bank of New York that 44 percent of college graduates are working jobs that don’t require a degree. So in this kind of uncertain economy, is getting into debt really worth a minimum wage job?
Unfortunately, instead of reining in the federal government's handouts to universities, it seems the Obama Administration is offering more of the same -- a subsidy for colleges, not students.