Video: Brian Riedl on Student Loan Forgiveness

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Brian Riedl, senior fellow at the Manhattan Institute, joins David for a conversation on President Joe Biden’s plan to provide tens of millions of Americans with student loan debt relief. What are the consequences of the president’s executive action? What does this reveal about progressive priorities? Do Republicans have a response?

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  1. Ruth Martin

    As a professor at a community college, I feel like blaming the increase of middle management at colleges and universities is a bit simplistic. It is a factor, but it isn't everything. For instance, in the 60's and 70's, state schools got somewhere around 70% of their funding from state and federal funds. Most state schools are getting somewhere around 30-35% from federal and state funds. The shortfall has to come from somewhere, and most state schools have no big endowments to pull from.

    Education is also a profession where Baumol's cost disease holds sway. I'm not saying that student loans are a good thing, as I actually think that it is awful for everyone.

    If I had the policy power, I would probably do something like this:
    1. Increase the prestige/visibility of trades and/or apprenticeships. Not everyone is cut out for a typical classroom, and we need to quit making people in that group feel less than because they have other gifts. This is why I gladly pay over $100/hour for a good plumber or electrician. We need the trades, and we are currently experiencing a shortage because we don't give them the public value they deserve.
    2. Make education a public good, again. Part of the reason that higher education got the funding that it did mid-twentieth century was because there was a cultural understanding that an educated population is better for the preservation of our republic.

    I'm not sure if either of these are feasible in the current political and cultural climate, and I have a few other ideas that are only half-baked at the moment, like public service for education agreements (similar to ROTC agreements), and elimination of federal student loan programs completely.

    As someone who is on the inside of the system, I'm fully aware that it is broken. Loan forgiveness feels like a bandaid put on a gaping gut wound where the intestines are spilling out.

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      Ben Connelly

      Public service for education is an interesting proposal!

      I’m not a fan of the administrative bloat, but I agree it’s not the only thing driving costs. I loved the amenities when I was at college, but even at the time I knew they should be the first thing to go. Heck I loved having access to four awesome gyms for “free” (meaning included in tuition) and access to sporting events, but gyms cost money.

      I studied in Scotland one semester (and paid extra to do it) and it was interesting over there. Much more “no frills.” Felt more like a resident in the city whose profession happened to be student than a member of a college. No dining halls. Student housing just meant an apartment block owned by the university and rented to the students. That’s closer to what I think we need.

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      1. Ruth Martin

        Your experience in Scotland actually sounds a lot more like the experience that my students get at a community college (CC) than at a 4 year college. Most CC's are commuter colleges that cater to students who are either returning to school or who may or may not plan to go beyond a 2 year degree. They tend to cost a fraction of the cost per credit hour and have smaller classes (often capped at 30 students or less per class) than a traditional 4 year college, but the school will be bare-bones for sure. My current college has a "gym" if you can call a room with a treadmill, an elliptical and a stationary bike a gym, but no athletics program and a very limited number of extra-curricular clubs. In many ways, CC's are the hidden gems of higher ed, since starting there can cut your cost of college by literally thousands of dollars. It is still possible to pay out of pocket for a semester of school at most CC's, while that is absolutely NOT possible at most traditional 4 year colleges. Additionally, if you finish your associate's degree, the 4 year college that you transfer into will usually only ask you to finish all of the upper division classes of a degree--you won't have to re-take or complete the general ed classes normally required of a 4 year degree (at least for state schools--private schools are a different animal). Yet, there is a stigma for beginning at a CC, and students are often penalized for starting there by reduced access to scholarships and school-based grants.

        I would also agree that amenities are driving up cost, but, as a country, we also have a surplus of college admission slots for the number of students, and that is only going to increase as we move through the newer generations coming up through education. Gen Z and whatever they are calling the generation after them are smaller than Millennials, and with our current birth rate dropping, that trend can only get worse. One Higher Ed Blogger that I respect (blog is Confessions of Community College Dean, and I read this years ago--any errors are my own) once said that, as the need for higher education contracted, we would see the following things happen:
        1. More and more corporations would ask for certificates of specific skills over a full college degree (we already see this happening to an extent in companies such as google as well as in the training/certificate programs you can participate in through websites like LinkedIn)
        2. bland, non-niche private liberal arts colleges would go belly up and disappear.
        3. private schools with the big endowments would survive, but get even more elitist/prestigious than they already are.
        4. highly niched private colleges would survive, but mostly because of their branding as a niche school.

        From my own experience, I can tell you that students seem to choose a school based on one of four criteria: it has the best amenities or perks, it gives the best financial aid award package, their parents wanted them to go there, or it has the lowest cost overall. In my own small regional community college, the last holds sway. At the CC I taught at before this, our school fed directly into one of the most prestigious public schools in that state (and which was notoriously difficult to get into)--Students would apply for the CC so that, as soon as they could show prestigious state U that they were worthy, they would transfer in (perks). My own family tends toward the "show me the money" attitude--You go to school where you get the most scholarship money.

        All this to say that higher ed is currently being squeezed on multiple sides. Schools are trying to be competitive, and in the process are making some very horrible, non-sustainable decisions. So far, the current federal financial aid system is propping it up, but that will only work for so long. It will likely continue to do so until forced to do otherwise. That is why the current loan forgiveness is a band aid on a gut wound.

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          Ben Connelly

          I knew some kids who did the CC-first route (I went to a state school, albeit one of the more expensive/prestigious ones). Some of them experienced a stigma but not from me or from professors. Some of them came in with more maturity than the average student their age (although in one case the opposite happened).

          One problem is the dual-edged sword of prestige and expensive. Most schools know they can move up the rankings by raising tuition and admitting fewer students (literally being more exclusive).

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          1. Ruth Martin

            I think the reality is a bit more nuanced than that. Disclaimer: I have never worked at a research 1 university, public or otherwise. I did work at a state school that was striving toward that, however.

            Within the university system, one gets prestige from the amount of research dollars and cutting edge research that is happening at the institution, not based on tuition or exclusivity. Most 4 year institutions either have a research 1 rating or are striving toward it, but as far as I know, cost of tuition is not part of that equation.

            It might be a result, though. R1 institutions can/will attract professors that are "rockstars" in their fields, and hiring packages are part of that equation. When you have someone who is a household name in your field as a professor, that attracts more students to your program, which means you need to do one of two things: build more infrastructure to handle the additional students or find a way to limit those students.

            The former lags behind the need by years, and usually means a whole lot of fundraising. Raising tuition can do so a lot easier. Especially with state run R1 schools, that isn't the goal. At my former CC, one of my colleagues had a spouse who worked at the prestigious R1 state school in our town. According to her, that institution was more exclusive more because of a lack of capacity than because they wanted to turn away students.

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